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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 April 30, 2024
OR
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 logo 1 for sec.jpg
Veeva Systems Inc.
(Exact name of registrant as specified in its charter)
____________________________________________________________________________________
Delaware20-8235463
(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) (925452-6500
(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 classTrading SymbolName of each exchange on which registered
Class A Common Stock,
par value $0.00001 per share
VEEVThe 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 filerAccelerated filer
Non-accelerated filerSmaller 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 May 31, 2024, there were 161,651,713 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
2
Veeva Systems Inc. | Form 10-Q

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.
Veeva Systems Inc. | Form 10-Q
3

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)
April 30,
2024
January 31,
2024
Assets
Current assets:
Cash and cash equivalents$1,197,196 $703,487 
Short-term investments3,567,841 3,324,269 
Accounts receivable, net of allowance for doubtful accounts of $216 and $520, respectively
362,320 852,172 
Unbilled accounts receivable38,771 36,365 
Prepaid expenses and other current assets78,820 86,918 
Total current assets5,244,948 5,003,211 
Property and equipment, net58,042 58,532 
Deferred costs, net23,967 23,916 
Lease right-of-use assets44,583 45,602 
Goodwill439,877 439,877 
Intangible assets, net58,231 63,017 
Deferred income taxes266,060 233,463 
Other long-term assets51,850 43,302 
Total assets$6,187,558 $5,910,920 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$31,930 $31,513 
Accrued compensation and benefits38,755 43,433 
Accrued expenses and other current liabilities41,187 32,980 
Income tax payable71,567 11,862 
Deferred revenue1,029,455 1,049,761 
Lease liabilities10,392 9,334 
Total current liabilities1,223,286 1,178,883 
Deferred income taxes705 2,052 
Lease liabilities, noncurrent45,351 46,441 
Other long-term liabilities28,835 38,720 
Total liabilities1,298,177 1,266,096 
Commitments and contingencies (note 13)
Stockholders’ equity:
Common stock
2 2 
Additional paid-in capital2,017,904 1,915,002 
Accumulated other comprehensive loss(30,646)(10,637)
Retained earnings2,902,121 2,740,457 
Total stockholders’ equity4,889,381 4,644,824 
Total liabilities and stockholders’ equity$6,187,558 $5,910,920 
See Notes to Condensed Consolidated Financial Statements.
4
Veeva Systems Inc. | Form 10-Q

VEEVA SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except per share data)
(Unaudited)
Three months ended April 30,
20242023
Revenues:
Subscription services$533,955 $414,546 
Professional services and other116,390 111,779 
Total revenues650,345 526,325 
Cost of revenues(1):
Cost of subscription services78,148 67,575 
Cost of professional services and other95,736 99,088 
Total cost of revenues173,884 166,663 
Gross profit476,461 359,662 
Operating expenses(1):
Research and development162,711 146,960 
Sales and marketing97,301 88,503 
General and administrative61,277 62,669 
Total operating expenses321,289 298,132 
Operating income155,172 61,530 
Other income, net51,729 30,248 
Income before income taxes206,901 91,778 
Income tax provision (benefit)
45,237 (39,743)
Net income$161,664 $131,521 
Net income per share:
Basic$1.00 $0.82 
Diluted$0.98 $0.81 
Weighted-average shares used to compute net income per share:
Basic161,421 159,852 
Diluted164,394 162,521 
Other comprehensive income:
Net change in unrealized (loss) gain on available-for-sale investments
$(18,861)$5,428 
Net change in cumulative foreign currency translation loss
(1,148)(58)
Comprehensive income$141,655 $136,891 
(1) Includes stock-based compensation as follows:
Cost of revenues:
Cost of subscription services$1,554 $1,505 
Cost of professional services and other12,535 12,722 
Research and development41,743 38,906 
Sales and marketing23,043 20,135 
General and administrative17,036 17,451 
Total stock-based compensation$95,911 $90,719 
See Notes to Condensed Consolidated Financial Statements.
Veeva Systems Inc. | Form 10-Q
5

VEEVA SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
Three months ended April 30, 2024
Common stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Total
stockholders’
equity
SharesAmount
Balances at beginning of period161,260,172 $2 $1,915,002 $2,740,457 $(10,637)$4,644,824 
Issuance of common stock upon exercise of stock options178,777 — 28,434 — — 28,434 
Issuance of common stock upon vesting of restricted stock units295,043 — — — — — 
Shares withheld related to net share settlement(109,381)— (24,958)— — (24,958)
Stock-based compensation expense— — 99,426 — — 99,426 
Change in other comprehensive loss— — — — (20,009)(20,009)
Net income— — — 161,664 — 161,664 
Balances at end of period161,624,611 $2 $2,017,904 $2,902,121 $(30,646)$4,889,381 
Three months ended April 30, 2023
Class A & B
common stock(1)
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Total
stockholders’
equity
SharesAmount
Balances at beginning of period158,244,607 $2 $1,532,627 $2,214,752 $(31,129)$3,716,252 
Issuance of common stock upon exercise of stock options1,788,009 — 15,233 — — 15,233 
Issuance of common stock upon vesting of restricted stock units260,782 — — — — — 
Shares withheld related to net share settlement(93,166)— (16,987)— — (16,987)
Stock-based compensation expense— — 91,674 — — 91,674 
Change in other comprehensive loss— — — — 5,370 5,370 
Net income— — — 131,521 — 131,521 
Balances at end of period160,200,232 $2 $1,622,547 $2,346,273 $(25,759)$3,943,063 
(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.

6
Veeva Systems Inc. | Form 10-Q

VEEVA SYSTEMS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended April 30,
20242023
Cash flows from operating activities
Net income$161,664 $131,521 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization8,499 7,549 
Reduction of operating lease right-of-use assets2,783 3,060 
Accretion of discount on short-term investments
(6,187)(3,407)
Stock-based compensation95,911 90,719 
Amortization of deferred costs3,803 5,052 
Deferred income taxes(26,539)(21,514)
Loss on foreign currency from mark-to-market derivative
1,082 180 
Bad debt (recovery) expense
(152)155 
Changes in operating assets and liabilities:
Accounts receivable490,004 289,960 
Unbilled accounts receivable(2,406)44,104 
Deferred costs(3,854)3,607 
Prepaid expenses and other current and long-term assets8,160 (36,298)
Accounts payable280 1,955 
Accrued expenses and other current liabilities2,597 (3,344)
Income taxes payable59,705 (329)
Deferred revenue(31,292)(1,221)
Operating lease liabilities(1,643)(2,693)
Other long-term liabilities1,101 (3,120)
Net cash provided by operating activities763,516 505,936 
Cash flows from investing activities
Purchases of short-term investments(777,831)(612,492)
Maturities and sales of short-term investments513,929 318,056 
Long-term assets(8,476)(2,958)
Net cash used in investing activities(272,378)(297,394)
Cash flows from financing activities
Proceeds from exercise of common stock options28,434 15,233 
Taxes paid related to net share settlement of equity awards(24,606)(16,625)
Net cash provided by (used in) financing activities
3,828 (1,392)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(1,257)19 
Net change in cash, cash equivalents, and restricted cash493,709 207,169 
Cash, cash equivalents, and restricted cash at beginning of period706,670 889,650 
Cash, cash equivalents, and restricted cash at end of period$1,200,379 $1,096,819 
Cash, cash equivalents, and restricted cash at end of period:
Cash and cash equivalents$1,197,196 $1,093,634 
Restricted cash included in other long-term assets3,183 3,185 
Total cash, cash equivalents, and restricted cash at end of period$1,200,379 $1,096,819 
Supplemental disclosures of other cash flow information:
Cash paid for income taxes, net of refunds$4,229 $1,034 
Excess tax benefits from employee stock plans$3,121 $62,089 
See Notes to Condensed Consolidated Financial Statements.
Veeva Systems Inc. | Form 10-Q
7

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.

8
Veeva Systems Inc. | Form 10-Q

Note 2. Short-Term Investments
As of April 30, 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 deposits$98,650 $23 $(55)$98,618 
Asset-backed securities659,618 571 (3,834)656,355 
Commercial paper284,131 6 (119)284,018 
Corporate notes and bonds1,719,063 673 (12,669)1,707,067 
Foreign government bonds54,834  (456)54,378 
Municipal securities
76,780 41 (473)76,348 
U.S. agency obligations55,920  (211)55,709 
U.S. treasury securities642,726  (7,378)635,348 
Total available-for-sale securities$3,591,722 $1,314 $(25,195)$3,567,841 
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 deposits$94,210 $87 $(14)$94,283 
Asset-backed securities605,852 2,916 (1,787)606,981 
Commercial paper144,218 47 (20)144,245 
Corporate notes and bonds1,581,382 8,835 (5,188)1,585,029 
Foreign government bonds50,180 206 (180)50,206 
Municipal securities
79,404 301 (231)79,474 
U.S. agency obligations49,372 232 (12)49,592 
U.S. treasury securities717,015 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):
April 30,
2024
January 31,
2024
Due in one year or less$1,164,946 $919,871 
Due in greater than one year2,402,895 2,404,398 
Total$3,567,841 $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.
Veeva Systems Inc. | Form 10-Q
9

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 April 30, 2024 (in thousands):
12 months or less
Greater than 12 months
Fair
value
Gross
unrealized
losses
Fair
value
Gross
unrealized
losses
Certificates of deposits$66,055 $(55)$ $ 
Asset-backed securities415,388 (2,530)91,285 (1,304)
Commercial paper257,932 (119)  
Corporate notes and bonds1,191,177 (9,496)235,212 (3,173)
Foreign government bonds41,939 (336)12,439 (120)
Municipal securities44,941 (392)16,998 (81)
U.S. agency obligations55,709 (211)  
U.S. treasury securities498,599 (5,163)136,749 (2,215)
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 ValueGross unrealized losses
Certificates of deposits$22,465 $(14)$ $ 
Asset-backed securities120,543 (343)105,419 (1,444)
Commercial paper70,037 (20)  
Corporate notes and bonds394,823 (1,560)280,092 (3,628)
Foreign government bonds8,915 (19)9,784 (161)
Municipal securities
31,418 (122)13,686 (109)
U.S. agency obligations1,795 (3)4,991 (9)
U.S. treasury securities280,946 (1,227)204,274 (2,597)
Note 3. Deferred Costs
Deferred costs, which consist of deferred sales commissions, was $24 million as of both April 30, 2024 and January 31, 2024. Amortization expense for the deferred costs included in sales and marketing expenses in the condensed consolidated statements of comprehensive income was $4 million for the three months ended April 30, 2024 and $5 million for the three months ended April 30, 2023. 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):
April 30,
2024
January 31,
2024
Land$3,040 $3,040 
Building20,984 20,984 
Land improvements and building improvements22,392 22,392 
Equipment and computers2,602 2,551 
Furniture and fixtures15,638 15,498 
Leasehold improvements30,915 30,793 
Construction in progress202 31 
95,773 95,289 
Less accumulated depreciation(37,731)(36,757)
Total property and equipment, net$58,042 $58,532 
10
Veeva Systems Inc. | Form 10-Q

Total depreciation expense was immaterial for the three months ended April 30, 2024 and 2023. Land is not depreciated.
Note 5. Goodwill and Intangible Assets
Goodwill was $440 million as of both April 30, 2024 and January 31, 2024.
The following schedule presents the details of intangible assets as of April 30, 2024 (dollar amounts in thousands):
April 30, 2024
Gross
carrying
amount
Accumulated
amortization
Net
Remaining
useful life
(in years)
Existing technology$28,580 $(21,686)$6,894 1.7
Customer relationships113,157 (64,575)48,582 5.1
Trade name and trademarks
13,900 (12,574)1,326 0.5
Other intangibles21,405 (19,976)1,429 2.1
Total intangible assets$177,042 $(118,811)$58,231 
The following schedule presents the details of intangible assets as of January 31, 2024 (dollar amounts in thousands):
January 31, 2024
Gross
carrying
amount
Accumulated
amortization
NetRemaining
useful life
(in years)
Existing technology$28,580 $(20,646)$7,934 2.0
Customer relationships113,157 (61,755)51,402 5.3
Trade name and trademarks
13,900 (11,925)1,975 0.8
Other intangibles21,405 (19,699)1,706 2.2
Total intangible assets$177,042 $(114,025)$63,017 
Amortization expense associated with intangible assets was $5 million for the three months ended April 30, 2024 and 2023.
As of April 30, 2024, the estimated amortization expense for intangible assets was as follows (in thousands):
Fiscal YearEstimated
amortization
expense
Remaining for 2025$13,771 
202614,147 
20278,922 
20287,778 
20297,782 
Thereafter5,831 
Total$58,231 
 
Veeva Systems Inc. | Form 10-Q
11

Note 6. Accrued Expenses
Accrued expenses consisted of the following as of the dates shown (in thousands):
April 30,
2024
January 31,
2024
Accrued commissions$3,168 $9,848 
Accrued bonus3,545 3,481 
Accrued vacation (1)
8,296 7,375 
Payroll tax payable13,771 13,829 
Accrued other compensation and benefits9,975 8,900 
Total accrued compensation and benefits$38,755 $43,433 
Accrued fees payable to Salesforce, Inc.6,536 $6,562 
Taxes payable5,881 7,632 
Other accrued expenses (2)
28,770 18,786 
Total accrued expenses and other current liabilities$41,187 $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

The following table presents the fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of April 30, 2024 (in thousands):
Level 1
Level 2
Total
Assets
Cash equivalents:
Money market funds$292,069 $ $292,069 
U.S. Treasury securities 67,891 67,891 
Commercial paper 35,543 35,543 
Short-term investments:
Certificates of deposit 98,618 98,618 
Asset-backed securities 656,355 656,355 
Commercial paper 284,018 284,018 
Corporate notes and bonds 1,707,067 1,707,067 
Foreign government bonds 54,378 54,378 
Municipal securities 76,348 76,348 
U.S. agency obligations 55,709 55,709 
U.S. Treasury securities 635,348 635,348 
Foreign currency derivative contracts 108 108 
Total financial assets$292,069 $3,671,383 $3,963,452 
Liabilities
Foreign currency derivative contracts$ $(806)$(806)
Total financial liabilities$ $(806)$(806)
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).
Veeva Systems Inc. | Form 10-Q
13

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. The realized foreign currency gains were not material for both the three months ended April 30, 2024 and 2023.
The fair value of our outstanding derivative instruments is summarized below (in thousands): 
April 30,
2024
January 31,
2024
Notional amount of foreign currency derivative contracts$133,096 $201,407 
Fair value of foreign currency derivative contracts133,909 201,024 
Note 8. Income Taxes
For the three months ended April 30, 2024 and 2023, our effective tax rates were 21.9% and (43.3)%, respectively. During the three months ended April 30, 2024, as compared to the prior year period, our effective tax rate increased primarily due to reduced excess tax benefits related to equity compensation. We recognized excess tax benefits of $4 million and $64 million in our provision for income taxes for the three months ended April 30, 2024 and 2023, respectively. The decrease in excess tax benefits during the three months ended April 30, 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 $440 million of subscription services revenue for the three months ended April 30, 2024 and $354 million for the three months ended April 30, 2023. Professional services revenue recognized in the same periods from deferred revenue balances at the beginning of the respective periods was immaterial.
Transaction Price Allocated to the Remaining Performance Obligations
As of April 30, 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 April 30, 2024, unbilled accounts receivable consisted of (i) a receivable of $35 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.
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. Our leases have various expiration dates through 2034, some of which include options to extend the leases for up to seven years. Additionally, we are the sublessor for certain office space. Our sublease income for each of the three months ended April 30, 2024 and 2023 was immaterial.
For the three months ended April 30, 2024 and 2023, our operating lease expense was $4 million.
Supplemental cash flow information related to leases was as follows (in thousands):
14
Veeva Systems Inc. | Form 10-Q

Three months ended April 30,
20242023
Cash paid for operating lease liabilities$2,253 $3,295 
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities605  
Supplemental balance sheet information related to operating leases was as follows:
April 30, 2024January 31, 2024
Weighted Average Remaining Lease Term6.5 years6.6 years
Weighted Average Discount Rate4.4 %4.4 %
As of April 30, 2024, remaining maturities of operating lease liabilities are as follows (in thousands):
Fiscal Year
Remaining for 2025$9,552 
202611,037 
202710,027 
20289,181 
20296,626 
Thereafter18,274 
Total operating lease payments64,697 
Less imputed interest(8,954)
Total operating lease liabilities$55,743 
Note 11. Stockholders’ Equity
Common Stock
As of April 30, 2024, we had 161,624,611 shares of common stock outstanding.
Stock Option Activity
A summary of stock option activity for the three months ended April 30, 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, 202411,147,810 $157.20 6.7$626 
Options granted1,914,837 214.82 
Options exercised(178,777)159.05 
Options forfeited/cancelled(132,323)208.61 
Options outstanding at April 30, 202412,751,547 $165.33 6.9$551 
Options vested and exercisable at April 30, 20246,180,088 $136.47 5.4$441 
Options vested and exercisable at April 30, 2024 and expected to vest thereafter12,751,547 $165.33 6.9$551 
The options granted during the three months ended April 30, 2024 were predominantly made in connection with our annual performance review cycle. The weighted average grant-date fair value of options granted was $101.26 per option for the three months ended April 30, 2024.
As of April 30, 2024, there was $485 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.
Veeva Systems Inc. | Form 10-Q
15

As of April 30, 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 $12 million for the three months ended April 30, 2024.
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 April 30,
20242023
Volatility40%-41%39%-40%
Expected term (in years)6.25-7.006.25-7.00
Risk-free interest rate4.12%-4.65%3.34%-3.99%
Dividend yield%%
Restricted Stock Units
A summary of restricted stock unit (RSU) activity for the three months ended April 30, 2024 is as follows:
Unreleased restricted
stock units
Weighted 
average grant
date fair value
Balance at January 31, 20241,011,731 $192.77 
RSUs granted882,706 214.83 
RSUs vested(295,043)179.19 
RSUs forfeited/cancelled(15,610)202.48 
Balance at April 30, 20241,583,784 207.50 
As of April 30, 2024, there was a total of $252 million in unrecognized compensation cost related to unvested RSUs. This cost is expected to be recognized over a weighted-average period of approximately 1.4 years. The total grant date fair value of RSUs vested was $67 million for the three months ended April 30, 2024.
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 the three months ended April 30, 2023, we have disclosed earnings per share for Class A and Class B common stock for the three months ended April 30, 2023. For the three months ended April 30, 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.
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Veeva Systems Inc. | Form 10-Q

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 April 30,
20242023
Common
Class AClass B
Basic
Numerator
Net income, basic$161,664 $119,574 $11,947 
Denominator
Weighted average shares used in computing net income per share, basic161,421 145,332 14,520 
Net income per share, basic$1.00 $0.82 $0.82 
Diluted
Numerator
Net income, basic$161,664 $119,574 $11,947 
Reallocation as a result of conversion of Class B to Class A common stock:
Net income, basic 11,947  
Reallocation of net income to Class B common stock  1,964 
Net income, diluted$161,664 $131,521 $13,911 
Denominator
Number of shares used for basic net income per share computation161,421 145,332 14,520 
Conversion of Class B to Class A common stock 14,520  
Effect of potentially dilutive common shares2,973 2,669 2,669 
Weighted average shares used in computing net income per share, diluted164,394 162,521 17,189 
Net income per share, diluted$0.98 $0.81 $0.81 
Potential common share equivalents excluded where the inclusion would be anti-dilutive are as follows:
Three months ended April 30,
20242023
Options and awards 2,972,590 5,749,358 
Note 13. Commitments and Contingencies
Litigation
IQVIA Litigation Matters
Veeva OpenData/Network Action.
On January 10, 2017, IQVIA Inc. (formerly Quintiles IMS Incorporated) and IMS Software Services, Ltd. (collectively, “IQVIA”) filed a complaint against us in the U.S. District Court for the District of New Jersey (IQVIA Inc. v. Veeva Systems Inc. (No. 2:17-cv-00177)). In the complaint, IQVIA alleges that we used unauthorized access to proprietary IQVIA data to improve our software and data products and that our software is designed to steal IQVIA trade secrets. IQVIA further alleges that we have intentionally gained unauthorized access to IQVIA proprietary information to gain an unfair advantage in marketing our products and that we have made false statements concerning IQVIA’s conduct and our data security capabilities. IQVIA asserts claims under both federal and state misappropriation of trade secret laws, federal false advertising law, and common law claims for unjust enrichment, tortious interference, and unfair trade practices. The complaint seeks declaratory and injunctive relief and unspecified monetary damages.
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On March 13, 2017, we filed our answer denying IQVIA's claims and filed counterclaims. Our counterclaims allege that IQVIA, as the dominant provider of data for life sciences companies, has abused monopoly power to exclude Veeva OpenData and Veeva Network from their respective markets. The counterclaims allege that IQVIA has engaged in various tactics to prevent customers from using our applications and has deliberately raised costs and increased the difficulty of attempting to switch from IQVIA data to our data products. As amended, our counterclaims assert federal and state antitrust claims, as well as claims under California’s Unfair Practices Act and common law claims for intentional interference with contractual relations, intentional interference with prospective economic advantage, and negligent misrepresentation. The counterclaims seek injunctive relief, monetary damages exceeding $200 million, and attorneys’ fees. On October 3, 2018, the court denied IQVIA’s motion to dismiss our antitrust claims.
On February 18, 2020, IQVIA filed a motion for sanctions against Veeva, seeking default judgment and dismissal and, in the alternative, an adverse inference at trial related to discovery disputes. On May 7, 2021, the special master appointed to oversee litigation discovery ruled against IQVIA’s request for default judgment and dismissal and ruled in IQVIA’s favor with respect to certain other matters, including recommending to the trial judge that a permissive adverse inference instruction be issued to the jury with respect to certain documents that were not preserved by Veeva. Should the trial judge accept the recommendation, the jury would be permitted, but not required, to infer that certain evidence not preserved by Veeva would have been unfavorable to Veeva, if the jury first concludes that Veeva controlled the evidence, that the evidence was relevant, and that Veeva should have preserved the evidence. The jury is also likely to be instructed that it may also consider whether the non-preserved evidence was duplicative of other evidence produced by Veeva and whether Veeva’s conduct was reasonable in light of all circumstances. Veeva was also ordered to pay IQVIA’s fees and expenses incurred in connection with portions of its sanctions motion. On June 4, 2021, we appealed the special master’s ruling and IQVIA’s fee award to the federal district court judge.
Veeva Nitro Action.
On July 17, 2019, IQVIA filed a lawsuit in the U.S. District Court for the District of New Jersey (IQVIA Inc. v. Veeva Systems Inc. (No. 2:19-cv-15517)) (IQVIA Declaratory Action) seeking a declaratory judgment that IQVIA is not liable to Veeva for disallowing use of IQVIA’s data products in Veeva Nitro or any later-introduced Veeva software products. The IQVIA Declaratory Action does not seek any monetary relief.
On July 18, 2019, we filed a lawsuit against IQVIA in the U.S. District Court for the Northern District of California (Veeva Systems Inc. v. IQVIA Inc. (No. 3:19-cv-04137)) (Veeva Nitro Action), alleging that IQVIA engaged in anticompetitive conduct as to Veeva Nitro. Our complaint asserts federal and state antitrust claims, as well as claims under California’s Unfair Competition Law and common law claims for intentional interference with contractual relations and intentional interference with prospective economic advantage. The complaint seeks injunctive relief and monetary damages. IQVIA filed its answer and affirmative defenses on September 5, 2019.
On September 26, 2019, the Northern District of California transferred the Veeva Nitro Action to the District of New Jersey (Veeva Systems Inc. v. IQVIA Inc. (No. 2:19-cv-18558)). On March 24, 2020, we amended our complaint in the Veeva Nitro Action to include allegations of IQVIA’s anticompetitive conduct as to additional Veeva software applications, such as Veeva Andi, Veeva Align, and Veeva Vault MedComms; additional examples of IQVIA’s monopolistic behavior against Veeva Nitro; IQVIA’s unlawful access of Veeva’s proprietary software products; and a request for declaratory relief. IQVIA answered the amended complaint on May 22, 2020. On August 21, 2020, the District of New Jersey consolidated the Veeva Nitro Action and IQVIA Declaratory Action.
Fact discovery in both the Veeva OpenData/Network Action and the Veeva Nitro Action is largely complete and expert discovery in both cases was completed in October 2023.
The federal district court presiding over all of the IQVIA Litigation Matters has bifurcated the claims for trial such that IQVIA's trade secret claims will go to trial first. That trial is expected to begin on February 10, 2025. No trial date has been set for Veeva's antitrust claims asserted in the Veeva OpenData/Network Action or the Veeva Nitro Action.
While it is not possible at this time to predict with any degree of certainty the ultimate outcome of these lawsuits, and we are unable to make a meaningful estimate of the amount or range of gain or loss, if any, that could result from them, we believe that we have substantial defenses against IQVIA’s claims, which we intend to vigorously contest, and that our counterclaims warrant injunctive relief and monetary damages for Veeva.
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Veeva Systems Inc. | Form 10-Q

Fee Arrangements Related to the IQVIA Litigation Matters. We have entered into partial contingency fee arrangements with certain law firms representing us in the IQVIA litigations. Pursuant to those arrangements, such law firms are entitled to an agreed portion of any damages we recover from IQVIA or may be entitled to payment of success fees from us based on the achievement of certain outcomes. We are unable to make an estimate of any liability we may have in connection with this arrangement and accordingly have not accrued any related liability at this time.
Mednet Litigation Matter
On July 14, 2020, Mednet Solutions, Inc. filed a complaint in Minnesota state court (Mednet Solutions, Inc. v. Veeva Systems Inc. (No. 27-CV-20-9374)) against us and a Veeva employee who previously worked for Mednet. The complaint alleged that the employee improperly accessed Mednet’s computer systems after joining Veeva, in violation of his employment agreement to misappropriate Mednet’s confidential and trade secret information for our benefit. On December 9, 2020, the case was removed to the U.S. District Court for the District of Minnesota (No. 20-cv-2502). On May 30, 2024, we entered into a settlement agreement with Mednet, which will result in dismissal of the case with prejudice.
Other Litigation Matters
From time to time, we may be involved in other legal proceedings and subject to claims incident to the ordinary course of business. Although the results of such legal proceedings and claims cannot be predicted with certainty, we believe we are not currently a party to any other legal proceedings, the outcome of which, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows, or financial position. Regardless of the outcome, such proceedings can have an adverse impact on us because of defense and settlement costs, diversion of resources, and other factors, and there can be no assurances that favorable outcomes will be obtained.
Note 14. Revenues by Product
We group our revenues into two product areas: Commercial Solutions and R&D Solutions. Commercial Solutions revenues consist of revenues from our Veeva Commercial Cloud, Veeva Data Cloud, and Veeva Claims solutions. R&D Solutions consist of revenues from our Veeva Development Cloud, Veeva RegulatoryOne, and Veeva QualityOne solutions.
Total revenues consist of the following (in thousands):
Three months ended April 30,
20242023
Subscription services
Commercial Solutions$261,316 $239,324 
R&D Solutions272,639 175,222 
Total subscription services$533,955 $414,546 
Professional services
Commercial Solutions$48,772 $44,864 
R&D Solutions67,618 66,915 
Total professional services$116,390 $111,779 
Total revenues$650,345 $526,325 
Note 15. Information about Geographic Areas
We track and allocate revenues by principal geographic area rather than by individual country, which makes it impractical to disclose revenues for the United States or other specific foreign countries. We measure subscription services revenue primarily by the estimated location of the end users in each geographic area for our Commercial Solutions and primarily by the estimated location of usage in each geographic area for our R&D Solutions. We measure professional services revenue primarily by the location of the resources performing the professional services.
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Total revenues by geographic area were as follows for the periods shown below (in thousands):
Three months ended April 30,
20242023
Revenues by geography
North America$381,599 $313,975 
Europe189,915 142,423 
Asia Pacific62,440 55,577 
Middle East, Africa, and Latin America16,391 14,350 
Total revenues$650,345 $526,325 
Long-lived assets by geographic area are as follows as of the periods shown below (in thousands):
April 30,
2024
January 31,
2024
Long-lived assets by geography
North America$48,928 $49,725 
Europe6,607 6,885 
Asia Pacific1,075 751 
Middle East, Africa, and Latin America1,432 1,171 
Total long-lived assets$58,042 $58,532 
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Veeva Systems Inc. | Form 10-Q

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in this report. In addition to historical condensed consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”
Overview
Veeva is the leading provider of industry cloud solutions for the global life sciences industry. Our offerings span cloud software, data, 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. For a more detailed description of our business and products as of January 31, 2024, please see our Annual Report on Form 10-K for the fiscal year ended January 31, 2024 filed on March 25, 2024.

Our industry cloud solutions are grouped into three major product categories—Veeva Development Cloud, Veeva Commercial Cloud, and Veeva Data Cloud. For financial reporting purposes, revenues associated with our Veeva Commercial Cloud, Veeva Data Cloud, and Veeva Claims solutions are classified as “Commercial Solutions” revenues, and revenues associated with our Veeva Development Cloud, Veeva RegulatoryOne, and Veeva QualityOne solutions are classified as “R&D Solutions” revenues.
In our fiscal year ended January 31, 2024, we derived approximately 52% and 48% of our subscription services revenues and 50% and 50% of our total revenues from our Commercial Solutions and R&D Solutions, respectively. For the three months ended April 30, 2024, we derived approximately 49% and 51% of our subscription services revenues and 48% and 52% of our total revenues from our Commercial Solutions and R&D Solutions, respectively. Revenues associated with our R&D Solutions are expected to increase as a percentage of both subscription services revenues and total revenues in the future. We also offer certain of our R&D Solutions to industries outside the life sciences industry primarily in North America and Europe.
For our fiscal years ended January 31, 2024, 2023, and 2022, our total revenues were $2,364 million, $2,155 million, and $1,851 million, respectively, representing year-over-year growth in total revenues of 10% in our fiscal year ended January 31, 2024 and 16% in our fiscal year ended January 31, 2023. For our fiscal years ended January 31, 2024, 2023, and 2022, our subscription services revenues were $1,902 million, $1,733 million, and $1,484 million, respectively, representing year-over-year growth in subscription services revenues of 10% in our fiscal year ended January 31, 2024, and 17% in our fiscal year ended January 31, 2023. We generated net income of $526 million, $488 million, and $427 million for our fiscal years ended January 31, 2024, 2023, and 2022, respectively.
As of January 31, 2024, 2023, and 2022, we served 1,432, 1,388, and 1,205 customers, respectively. As of January 31, 2024, 2023, and 2022, we had 693, 684, and 653 Commercial Solutions customers, respectively, and 1,078, 1,025, and 860 R&D Solutions customers, respectively. These customer count totals are net of customer attrition during each period. The combined customer counts for Commercial Solutions and R&D Solutions exceed the total customer count in each year because some customers subscribe to products in both areas. Many of our applications for R&D are used by smaller, earlier stage, pre-commercial companies, some of which may not reach the commercialization stage.
Components of Results of Operations
Revenues
We derive our revenues primarily from subscription services fees and professional services fees. Subscription services revenues consist of fees from customers accessing our cloud-based software solutions and fees for our data solutions. Professional services and other revenues consist primarily of fees from implementation services,
Veeva Systems Inc. | Form 10-Q
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configuration, data services, training, and managed services related to our solutions and services related to our Veeva Business Consulting offering. For the three months ended April 30, 2024, subscription services revenues constituted 82% of total revenues and professional services and other revenues constituted 18% of total revenues.
We generally enter into master subscription agreements with our customers and count each distinct master subscription agreement that has not been terminated or expired and that has orders for which we have recognized revenue in the quarter as a distinct customer for purposes of determining our total number of current customers as of the end of that quarter. We generally enter into a single master subscription agreement with each customer, although in some instances, affiliated legal entities within the same corporate family may enter into separate master subscription agreements. Conversely, affiliated legal entities that maintain distinct master subscription agreements may choose to consolidate their orders under a single master subscription agreement, and, in that circumstance, our customer count would decrease. Divisions, subsidiaries, and operating units of our customers often place distinct orders for our subscription services under the same master subscription agreement, and we do not count such distinct orders as new customers for purposes of determining our total customer count. For purposes of determining customers of Veeva Crossix that do not contract under a master subscription agreement, we count each entity that has a statement of work or services agreement and a recurring known payment obligation as a distinct customer if such entity is not otherwise a customer of ours. For Veeva Crossix, we do not count as distinct customers agencies contracting with us on behalf of brands within life sciences companies.
New subscription orders for our Veeva CRM application generally have a one-year term. If a customer adds end users or additional Commercial Solutions to an existing order for our Veeva CRM application, such additional orders will generally be coterminous with the anniversary date of the Veeva CRM order, and as a result, orders for additional end users or additional Commercial Solutions will commonly have an initial term of less than one year.
Subscription services revenues are recognized ratably over the respective non-cancellable subscription term because of the continuous transfer of control to the customer. Our master subscription agreements that govern multi-year orders generally include a termination for convenience right for our customers. The amount of revenue recognized from such orders will generally be consistent with the amount invoiced for the relevant term of the order. When such multi-year orders are non-cancellable (other than for cause), we recognize the total contracted revenue ratably over the multi-year term of the order. For such non-cancellable orders, when the amounts we are entitled to invoice in any period pursuant to multi-year orders with escalating fees are less than the revenue recognized, we accrue an unbilled accounts receivable balance (a contract asset).
Our subscription orders are generally billed at the beginning of the subscription period in annual or quarterly increments, which means the annualized value of such orders may not be completely reflected in deferred revenue at any single point in time. Also, particularly with respect to expansion orders for our Commercial Solutions, because the term of orders for additional end users or applications is commonly less than one year to align to the renewal date of existing Commercial Solutions orders, the annualized value of such orders may not be completely reflected in deferred revenue at any single point in time. We have also agreed from time to time, and may agree in the future, to allow customers to change the renewal dates of their orders to, for example, align more closely with a customer’s annual budget process or to align with the renewal dates of other orders placed by other entities within the same corporate control group, or to change payment terms from annual to quarterly, or vice versa. Such changes may result in an order of less than one year as necessary to align all orders to the desired renewal date and, thus, may result in a lesser increase to deferred revenue compared to if the adjustment had not occurred. Additionally, changes in renewal dates may change the fiscal quarter in which deferred revenue associated with a particular order is booked. Accordingly, we do not believe that changes on a quarterly basis in deferred revenue, calculated billings, or normalized billings are accurate indicators of future revenues for any given period of time. We define the term calculated billings for any period to mean revenue for the period plus the change in deferred revenue from the immediately preceding period minus the change in unbilled accounts receivable from the immediately preceding period. We define the term normalized billings for any period to mean calculated billings adjusted for the impact of term changes in renewal business, such as in the timing (for example, changing the renewal date of multiple products to be coterminous) or billing frequency (for example, changing from annual to quarterly billings).
Our agreements typically provide that orders will automatically renew unless notice of non-renewal is provided in advance. Subscription services revenues are affected primarily by the number of customers, the scope of the subscription purchased by each customer (for example, the number of end users or other subscription usage metric) and the number of solutions subscribed to by each customer.
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Veeva Systems Inc. | Form 10-Q

We utilize our own personnel to perform our professional services and business consulting engagements with customers. In certain cases, we may utilize third-party subcontractors to perform professional services engagements. The majority of our professional services arrangements are billed on a time and materials basis and revenues are recognized over time based on time incurred and contractually agreed upon rates. Certain professional services and business consulting arrangements are billed on a fixed fee basis and revenues are typically recognized over time as the services are delivered based on time incurred. Data services and training revenues are generally recognized as the services are performed. Professional services revenues are affected primarily by our customers’ demands for implementation services, configuration, data services, training, speakers bureau logistics, and managed services in connection with our solutions. Our business consulting revenues are affected primarily by our customers’ demands for services related to a particular customer success initiative, strategic analysis, or business process change, and not by cloud software implementation.
Allocated Overhead
We accumulate certain costs such as building depreciation, office rent, utilities, and other facilities costs and allocate them across the various departments based on headcount. We refer to these costs as “allocated overhead.”
Cost of Revenues
Cost of subscription services revenues for all of our solutions consists of expenses related to our computing infrastructure provided by third parties, including Salesforce, Inc. and Amazon Web Services, personnel related costs associated with hosting our subscription services and providing support, including our data stewards, data acquisition costs, and costs of delivering our data solutions, expenses associated with computer equipment and software, and allocated overhead.
Cost of professional services and other consists primarily of employee-related expenses associated with providing professional and business consulting services. The cost of providing professional services is significantly higher as a percentage of the related revenues than for our subscription services due to the direct labor costs and costs of third-party subcontractors.
Operating Expenses
Research and Development. Research and development expenses consist primarily of employee-related expenses, third-party consulting fees, hosted infrastructure costs, and allocated overhead. We continue to focus our research and development efforts on our platforms, including adding new features and applications and increasing the functionality and enhancing the ease of use of our cloud-based applications.
Sales and Marketing. Sales and marketing expenses consist primarily of employee-related expenses, sales commissions, marketing program costs, amortization expense associated with purchased intangibles related to our customer contracts, customer relationships and brand development, travel-related expenses and allocated overhead. Marketing program costs include advertising, customer events, corporate communications, brand awareness, and product marketing activities. Sales commissions are costs of obtaining new customer contracts and are capitalized and then amortized over a period of benefit that we have determined to be three years.
General and Administrative. General and administrative expenses consist of employee-related expenses for our executive, finance and accounting, legal, employee success, management information systems personnel, and other administrative employees. In addition, general and administrative expenses include fees related to third-party legal counsel, fees related to third-party accounting, tax and audit services, other corporate expenses, and allocated overhead.
Other Income, Net
Other income, net, consists primarily of interest income, amortization of premiums paid or accretion of discounts on investments, and transaction gains or losses on foreign currency, net of hedging costs.
Veeva Systems Inc. | Form 10-Q
23

Provision for Income Taxes
Provision for income taxes consists of federal, state, and local income taxes in the United States and income taxes in certain foreign jurisdictions. See note 8 of the notes to our condensed consolidated financial statements.
Results of Operations
The following tables set forth selected condensed consolidated statements of operations data and such data as a percentage of total revenues for each of the periods indicated:
Three months ended April 30,
20242023
(in thousands)
Consolidated Statements of Comprehensive Income Data:
Revenues:
Subscription services$533,955 $414,546 
Professional services and other116,390 111,779 
Total revenues650,345 526,325 
Cost of revenues(1):
Cost of subscription services78,148 67,575 
Cost of professional services and other95,736 99,088 
Total cost of revenues173,884 166,663 
Gross profit476,461 359,662 
Operating expenses(1):
Research and development162,711 146,960 
Sales and marketing97,301 88,503 
General and administrative61,277 62,669 
Total operating expenses321,289 298,132 
Operating income155,172 61,530 
Other income, net51,729 30,248 
Income before income taxes206,901 91,778 
Income tax provision (benefit)
45,237 (39,743)
Net income$161,664 $131,521 
(1) Includes stock-based compensation as follows:
Cost of revenues:
Cost of subscription services$1,554 $1,505 
Cost of professional services and other12,535 12,722 
Research and development41,743 38,906 
Sales and marketing23,043 20,135 
General and administrative17,036 17,451 
Total stock-based compensation$95,911 $90,719 
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Veeva Systems Inc. | Form 10-Q

Revenues
Three months ended April 30,
20242023% Change