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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 July 31, 2023
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)
(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 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 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 August 30, 2023, there were 146,157,603 shares of the Registrant’s Class A common stock outstanding and 14,497,917 shares of the Registrant’s Class B common stock outstanding.


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)
July 31,
2023		January 31,
2023
Assets
Current assets:
Cash and cash equivalents$742,607 $886,465 
Short-term investments3,126,132 2,216,163 
Accounts receivable, net of allowance for doubtful accounts of $551 and $469, respectively
379,066 703,055 
Unbilled accounts receivable37,541 82,174 
Prepaid expenses and other current assets76,407 81,456 
Total current assets4,361,753 3,969,313 
Property and equipment, net56,937 49,817 
Deferred costs, net22,463 31,825 
Lease right-of-use assets51,059 55,336 
Goodwill439,877 439,877 
Intangible assets, net72,825 82,476 
Deferred income taxes184,331 136,697 
Other long-term assets38,898 38,955 
Total assets$5,228,143 $4,804,296 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$49,932 $41,678 
Accrued compensation and benefits48,296 44,282 
Accrued expenses and other current liabilities32,431 35,306 
Income tax payable24,143 4,946 
Deferred revenue836,500 869,285 
Lease liabilities10,652 11,306 
Total current liabilities1,001,954 1,006,803 
Deferred income taxes1,283 1,492 
Lease liabilities, noncurrent47,853 49,670 
Other long-term liabilities24,410 30,079 
Total liabilities1,075,500 1,088,044 
Commitments and contingencies (note 13)
Stockholders’ equity:
Class A common stock, $0.00001 par value; 800,000,000 shares authorized, 146,124,701 and 143,693,009 issued and outstanding at July 31, 2023 and January 31, 2023, respectively
2 2 
Class B common stock, $0.00001 par value; 190,000,000 shares authorized, 14,497,917 and 14,551,598 issued and outstanding at July 31, 2023 and January 31, 2023, respectively
— — 
Additional paid-in capital1,729,123 1,532,627 
Accumulated other comprehensive loss(34,383)(31,129)
Retained earnings2,457,901 2,214,752 
Total stockholders’ equity4,152,643 3,716,252 
Total liabilities and stockholders’ equity$5,228,143 $4,804,296 
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 July 31,Six months ended July 31,
2023202220232022
Revenues:
Subscription services$470,637 $428,649 $885,183 $831,281 
Professional services and other119,588 105,569 231,367 208,039 
Total revenues590,225 534,218 1,116,550 1,039,320 
Cost of revenues(1):
Cost of subscription services71,169 64,035 138,744 122,988 
Cost of professional services and other97,849 87,634 196,937 168,196 
Total cost of revenues169,018 151,669 335,681 291,184 
Gross profit421,207 382,549 780,869 748,136 
Operating expenses(1):
Research and development157,228 134,008 304,188 247,483 
Sales and marketing96,995 89,617 185,498 165,732 
General and administrative62,935 57,832 125,604 106,157 
Total operating expenses317,158 281,457 615,290 519,372 
Operating income104,049 101,092 165,579 228,764 
Other income, net38,826 8,398 69,074 11,107 
Income before income taxes142,875 109,490 234,653 239,871 
Income tax provision (benefit)31,247 18,889 (8,496)49,155 
Net income$111,628 $90,601 $243,149 $190,716 
Net income per share:
Basic$0.70 $0.58 $1.52 $1.23 
Diluted$0.68 $0.56 $1.49 $1.17 
Weighted-average shares used to compute net income per share:
Basic160,396 154,951 160,129 154,736 
Diluted163,284 162,132 162,989 162,499 
Other comprehensive income:
Net change in unrealized loss on available-for-sale investments$(8,891)$(2,224)$(3,463)$(13,223)
Net change in cumulative foreign currency translation gain (loss)267 (900)209 (2,154)
Comprehensive income$103,004 $87,477 $239,895 $175,339 
(1) Includes stock-based compensation as follows:
Cost of revenues:
Cost of subscription services$1,748 $1,693 $3,253 $2,970 
Cost of professional services and other14,216 13,818 26,938 23,808 
Research and development45,292 38,901 84,198 64,724 
Sales and marketing23,489 24,031 43,624 40,924 
General and administrative18,150 17,599 35,601 30,750 
Total stock-based compensation$102,895 $96,042 $193,614 $163,176 
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 July 31, 2023Three months ended July 31, 2022
Class A & B
common stock		Additional
paid-in
capital		Retained
earnings		Accumulated
other
comprehensive
loss		Total
stockholders’
equity		Class A & B
common stock		Additional paid-in capitalRetained earningsAccumulated other comprehensive lossTotal stockholders’ equity
SharesAmountSharesAmount
Balances at beginning of period160,200,232 $2 $1,622,547 $2,346,273 $(25,759)$3,943,063 154,797,960 $2 $1,265,323 $1,827,161 $(24,211)$3,068,275 
Issuance of common stock upon exercise of stock options233,434 — 22,995 — — 22,995 262,921 — 9,250 — — 9,250 
Issuance of common stock upon vesting of restricted stock units294,253 — — — — — 253,050 — — — — — 
Shares withheld related to net share settlement(105,301)— (20,589)— — (20,589)(89,257)— (17,761)— — (17,761)
Stock-based compensation expense— — 104,170 — — 104,170 — — 96,690 — — 96,690 
Change in other comprehensive loss— — — — (8,624)(8,624)— — — — (3,124)(3,124)
Net income— — — 111,628 — 111,628 — — — 90,601 — 90,601 
Balances at end of period160,622,618 $2 $1,729,123 $2,457,901 $(34,383)$4,152,643 155,224,674 $2 $1,353,502 $1,917,762 $(27,335)$3,243,931 
Six months ended July 31, 2023Six months ended July 31, 2022
Class A & B
common stock		Additional
paid-in
capital		Retained
earnings		Accumulated
other
comprehensive
loss		Total
stockholders’
equity		Class A & B
common stock		Additional
paid-in
capital		Retained
earnings		Accumulated
other
comprehensive
loss		Total
stockholders’
equity
SharesAmountSharesAmount
Balances at beginning of period158,244,607 $2 $1,532,627 $2,214,752 $(31,129)$3,716,252 154,196,597 $2 $1,196,547 $1,727,046 $(11,958)$2,911,637 
Issuance of common stock upon exercise of stock options2,021,443 — 38,228 — — 38,228 745,357 — 25,541 — — 25,541 
Issuance of common stock upon vesting of restricted stock units555,035 — — — — — 438,850 — — — — — 
Shares withheld related to net share settlement(198,467)— (37,575)— — (37,575)(156,130)— (32,671)— — (32,671)
Stock-based compensation expense— — 195,843 — — 195,843 — — 164,085 — — 164,085 
Change in other comprehensive loss— — — — (3,254)(3,254)— — — — (15,377)(15,377)
Net income— — — 243,149 — 243,149 — — — 190,716 — 190,716 
Balances at end of period160,622,618 $2 $1,729,123 $2,457,901 $(34,383)$4,152,643 155,224,674 $2 $1,353,502 $1,917,762 $(27,335)$3,243,931 
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 July 31,Six months ended July 31,
2023202220232022
Cash flows from operating activities
Net income$111,628 $90,601 $243,149 $190,716 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization8,087 7,228 15,636 14,286 
Reduction of operating lease right-of-use assets2,965 3,020 6,025 5,968 
(Accretion) amortization of discount on short-term investments(7,376)(507)(10,783)549 
Stock-based compensation102,895 96,042 193,614 163,176 
Amortization of deferred costs4,249 5,736 9,301 11,729 
Deferred income taxes(25,213)(20,881)(46,727)(53,313)
(Gain) loss on foreign currency from mark-to-market derivative(727)1,768 (547)1,186 
Bad debt expense341 146 496 121 
Changes in operating assets and liabilities:
Accounts receivable33,533 16,312 323,493 317,794 
Unbilled accounts receivable529 (15,807)44,633 (14,512)
Deferred costs(3,546)(3,421)61 (6,500)
Prepaid expenses and other current and long-term assets45,543 (3,513)9,245 (11,076)
Accounts payable6,099 5,540 8,054 10,661 
Accrued expenses and other current liabilities2,215 (475)(1,129)(2,811)
Income taxes payable19,526 (45,841)19,197 (2,618)
Deferred revenue(34,862)(39,998)(36,083)(47,469)
Operating lease liabilities(1,597)(3,081)(4,290)(5,112)
Other long-term liabilities747 517 (2,373)1,638 
Net cash provided by operating activities265,036 93,386 770,972 574,413 
Cash flows from investing activities
Purchases of short-term investments(988,074)(433,073)(1,600,566)(1,005,417)
Maturities and sales of short-term investments378,737 250,531 696,793 446,721 
Long-term assets(9,593)(1,663)(12,551)(3,996)
Net cash used in investing activities(618,930)(184,205)(916,324)(562,692)
Cash flows from financing activities
Proceeds from exercise of common stock options22,995 9,250 38,228 25,541 
Taxes paid related to net share settlement of equity awards(20,418)(17,134)(37,043)(32,133)
Net cash provided by (used in) financing activities2,577 (7,884)1,185 (6,592)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash290 (1,049)309 (2,923)
Net change in cash, cash equivalents, and restricted cash(351,027)(99,752)(143,858)2,206 
Cash, cash equivalents, and restricted cash at beginning of period1,096,819 1,243,183 889,650 1,141,225 
Cash, cash equivalents, and restricted cash at end of period$745,792 $1,143,431 $745,792 $1,143,431 
Cash, cash equivalents, and restricted cash at end of period:
Cash and cash equivalents$742,607 $1,140,246 $742,607 $1,140,246 
Restricted cash included in other long-term assets3,185 3,185 3,185 3,185 
Total cash, cash equivalents, and restricted cash at end of period$745,792 $1,143,431 $745,792 $1,143,431 
Supplemental disclosures of other cash flow information:
Cash paid for income taxes, net of refunds$6,232 $89,583 $7,266 $107,772 
Excess tax benefits from employee stock plans$3,211 $2,094 $65,300 $5,093 
Non-cash investing activities:
Changes in accounts payable and accrued expenses related to property and equipment purchases$1,146 $(3)$1,937 $(441)
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) to 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 accounts 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, 2023, filed on March 30, 2023. 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, 2023 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, 2024 or any other period.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make estimates, judgments, and assumptions that affect the condensed consolidated financial statements and the notes thereto. These estimates are based on information available as of the date of the condensed consolidated financial statements. On a regular basis, management evaluates these estimates and assumptions. Items subject to such estimates and assumptions include, but are not limited to:
•the standalone selling price for each distinct performance obligation included in customer contracts with multiple performance obligations;
•the determination of the period of benefit for amortization of deferred costs;
•the realizability of deferred income tax assets;
•the fair value of our stock-based awards.
As future events cannot be determined with precision, actual results could differ significantly from those estimates.
8
Veeva Systems Inc. | Form 10-Q
Recently Adopted Accounting Pronouncements
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with Topic 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts. Under the previous standard, such assets and liabilities were recognized by the acquirer at fair value on the acquisition date. The new standard is effective for this fiscal year beginning on February 1, 2023. We adopted the new standard as of February 1, 2023 and there was no material impact to our financial statements.
Note 2. Short-Term Investments
As of July 31, 2023, 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$129,560 $13 $(162)$129,411 
Asset-backed securities549,173 136 (5,603)543,706 
Commercial paper213,019 — (324)212,695 
Corporate notes and bonds1,338,800 636 (16,814)1,322,622 
Foreign government bonds27,257 — (502)26,755 
Municipal securities65,620 12 (762)64,870 
U.S. agency obligations40,680 — (213)40,467 
U.S. treasury securities795,415 — (9,809)785,606 
Total available-for-sale securities$3,159,524 $797 $(34,189)$3,126,132 
As of January 31, 2023, 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$37,998 $31 $(66)$37,963 
Asset-backed securities448,081 585 (5,708)442,958 
Commercial paper155,097 8 (580)154,525 
Corporate notes and bonds1,224,195 1,649 (17,880)1,207,964 
Foreign government bonds24,654 13 (516)24,151 
U.S. agency obligations32,995 4 (594)32,405 
U.S. treasury securities321,946 265 (6,014)316,197 
Total available-for-sale securities$2,244,966 $2,555 $(31,358)$2,216,163 
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):
July 31,
2023		January 31,
2023
Due in one year or less$1,258,195 $849,673 
Due in greater than one year1,867,937 1,366,490 
Total$3,126,132 $2,216,163 
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 July 31, 2023 (in thousands):
Less than 12 monthsGreater than 12 months
Fair
value		Gross
unrealized
losses		Fair
value		Gross
unrealized
losses
Certificates of deposits$86,658 $(162)$— $— 
Asset-backed securities372,159 (3,288)119,286 (2,315)
Commercial paper212,695 (324)— — 
Corporate notes and bonds774,510 (8,683)362,028 (8,131)
Foreign government bonds20,026 (208)6,728 (293)
Municipal securities46,680 (502)15,316 (261)
U.S. agency obligations32,701 (179)7,766 (34)
U.S. treasury securities708,532 (7,708)77,076 (2,101)
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, 2023 (in thousands):
Less than 12 monthsGreater than 12 months
Fair
value
Gross
unrealized
losses
Fair ValueGross unrealized losses
Certificates of deposits$15,934 $(66)$— $— 
Asset-backed securities293,854 (3,219)78,279 (2,489)
Commercial paper144,741 (580)— — 
Corporate notes and bonds604,264 (6,801)370,969 (11,079)
Foreign government bonds11,284 (126)11,827 (390)
U.S. agency obligations4,941 (61)24,461 (533)
U.S. treasury securities210,246 (3,661)63,422 (2,353)
Note 3. Deferred Costs
Deferred costs, which consist of deferred sales commissions, were $22 million and $32 million as of July 31, 2023 and January 31, 2023, 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 $9 million for the three and six months ended July 31, 2023, respectively, and $6 million and $12 million for the three and six months ended July 31, 2022, 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):
July 31,
2023		January 31,
2023
Land$3,040 $3,040 
Building20,984 20,984 
Land improvements and building improvements22,392 22,392 
Equipment and computers2,172 2,233 
Furniture and fixtures13,935 13,995 
Leasehold improvements18,709 18,986 
Construction in progress9,829 302 
91,061 81,932 
Less accumulated depreciation(34,124)(32,115)
Total property and equipment, net$56,937 $49,817 
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Veeva Systems Inc. | Form 10-Q
Total depreciation expense was $1 million and $3 million for the three and six months ended July 31, 2023, respectively, and $2 million and $3 million for the three and six months ended July 31, 2022, respectively. Land is not depreciated.
Note 5. Goodwill and Intangible Assets
Goodwill was $440 million as of both July 31, 2023 and January 31, 2023.
The following schedule presents the details of intangible assets as of July 31, 2023 (dollar amounts in thousands):
July 31, 2023
Gross
carrying
amount
Accumulated
amortization
Net
Remaining
useful life
(in years)
Existing technology$28,580 $(18,514)$10,066 2.4
Customer relationships113,157 (55,979)57,178 5.7
Trade name/trademarks13,900 (10,595)3,305 1.3
Other intangibles21,405 (19,129)2,276 2.6
Total intangible assets$177,042 $(104,217)$72,825 
The following schedule presents the details of intangible assets as of January 31, 2023 (dollar amounts in thousands):
January 31, 2023
Gross
carrying
amount		Accumulated
amortization		NetRemaining
useful life
(in years)
Existing technology$28,580 $(16,418)$12,162 2.9
Customer relationships113,157 (50,293)62,864 6.1
Trade name/trademarks13,900 (9,285)4,615 1.8
Other intangibles21,405 (18,570)2,835 3.0
Total intangible assets$177,042 $(94,566)$82,476 
Amortization expense associated with intangible assets was $5 million and $10 million for the three and six months ended July 31, 2023, respectively, and $5 million and $10 million for the three and six months ended July 31, 2022, respectively.
As of July 31, 2023, the estimated amortization expense for intangible assets was as follows (in thousands):
Fiscal YearEstimated
amortization
expense
Remaining for 2024$9,807 
202518,557 
202614,147 
20278,922 
20287,778 
Thereafter13,614 
Total$72,825 
 
Veeva Systems Inc. | Form 10-Q
11
Note 6. Accrued Expenses
Accrued expenses consisted of the following as of the dates shown (in thousands):
July 31,
2023		January 31,
2023
Accrued commissions$6,558 $11,240 
Accrued bonus3,299 3,484 
Accrued vacation (1)
8,406 6,653 
Payroll tax payable21,546 16,229 
Accrued other compensation and benefits8,487 6,676 
Total accrued compensation and benefits$48,296 $44,282 
Accrued fees payable to Salesforce, Inc.6,663 $6,653 
Taxes payable7,385 9,197 
Accrued third-party professional services subcontractors' fees1,653 2,597 
Other accrued expenses16,730 16,859 
Total accrued expenses and other current liabilities$32,431 $35,306 
(1) Represents accrued vacation primarily for international employees. Vacation does not accrue for most U.S. employees.
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.
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Veeva Systems Inc. | Form 10-Q
The following table presents the fair value hierarchy for financial assets measured at fair value on a recurring basis as of July 31, 2023 (in thousands):
Level 1
Level 2
Total
Assets
Cash equivalents:
Money market funds$110,330 $— $110,330 
U.S. Treasury securities— 24,898 24,898 
Short-term investments:
Certificates of deposit— 129,411 129,411 
Asset-backed securities— 543,706 543,706 
Commercial paper— 212,695 212,695 
Corporate notes and bonds— 1,322,622 1,322,622 
Foreign government bonds— 26,755 26,755 
Municipal securities— 64,870 64,870 
U.S. agency obligations— 40,467 40,467 
U.S. Treasury securities— 785,606 785,606 
Foreign currency derivative contracts— 798 798 
Total financial assets$110,330 $3,151,828 $3,262,158 
The following table presents the fair value hierarchy for financial assets measured at fair value on a recurring basis as of January 31, 2023 (in thousands):
Level 1
Level 2
Total
Assets
Cash equivalents:
Money market funds$180,895 $— $180,895 
U.S. Treasury securities— 22,929 22,929 
Corporate notes and bonds— 6,691 6,691 
Short-term investments:
Certificates of deposit— 37,963 37,963 
Asset-backed securities— 442,958 442,958 
Commercial paper— 154,525 154,525 
Corporate notes and bonds— 1,207,964 1,207,964 
Foreign government bonds— 24,151 24,151 
U.S. agency obligations— 32,405 32,405 
U.S. Treasury securities— 316,197 316,197 
Foreign currency derivative contracts— 251 251 
Total financial assets$180,895 $2,246,034 $2,426,929 
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 immaterial for both the three and six months ended July 31, 2023 and $4 million and $8 million for the three and six months ended July 31, 2022, respectively.
The fair value of our outstanding derivative instruments is summarized below (in thousands): 
July 31,
2023		January 31,
2023
Notional amount of foreign currency derivative contracts$66,938 $137,998 
Fair value of foreign currency derivative contracts66,116 137,860 
Note 8. Income Taxes
For the three months ended July 31, 2023 and 2022, our effective tax rates were 21.9% and 17.3%, respectively. During the three months ended July 31, 2023, as compared to the prior year period, our effective tax rate increased primarily due to the reduced benefit from equity transactions as well as the foreign derived intangible income deduction.
For the six months ended July 31, 2023 and 2022, our effective tax rates were (3.6)% and 20.5%, respectively. During the six months ended July 31, 2023 as compared to the prior year period, our effective tax rate decreased primarily due to the increase in excess tax benefits related to equity compensation. We recognized such excess tax benefits in our provision for income taxes of $68 million and $9 million for the six months ended July 31, 2023 and 2022, respectively. The increase in excess tax benefits during the six months ended July 31, 2023 was primarily due to our Chief Executive Officer’s exercise of stock options in February 2023 in connection with a previously announced plan.
Note 9. Deferred Revenue, Performance Obligations, and Unbilled Accounts Receivable
Of the beginning deferred revenue balance for the respective periods, we recognized $386 million and $577 million of subscription services revenue for the three and six months ended July 31, 2023, respectively, and $325 million and $484 million for the three and six months ended July 31, 2022, respectively. 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
Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancellable amounts that will be invoiced and recognized as revenues in future periods. We applied the practical expedient in accordance with ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606) to exclude the amounts related to professional services contracts as these contracts generally have a remaining duration of one year or less.
As of July 31, 2023, approximately $1,088 million of revenue is expected to be recognized from remaining performance obligations for subscription services contracts. We expect to recognize revenue on approximately 94% of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.
Unbilled Accounts Receivable
As of January 31, 2023, 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 $50 million primarily for revenue recognized from non-cancellable, multi-year orders in which fees increase annually but for which we are not contractually able to invoice until a future period.
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Veeva Systems Inc. | Form 10-Q
As of July 31, 2023, unbilled accounts receivable consisted of (i) a receivable of $34 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.
Since February 1, 2023, our master subscription agreements that govern multi-year orders generally include a termination for convenience right for our customers, which reduced the non-cancellable term of such orders. This resulted in a decrease to our contract asset balance from such orders. The contract asset balance from such orders was immaterial as of July 31, 2023.
Note 10. Leases
We have operating leases for some of our corporate offices. Our leases have various expiration dates through 2034, some of which include options to extend the leases for up to nine years. Additionally, we are the sublessor for certain office space. Our sublease income for each of the three and six months ended July 31, 2023 and 2022 was immaterial.
For the three months ended July 31, 2023 and 2022, our operating lease expense was $4 million and $3 million, respectively. For the six months ended July 31, 2023 and 2022, our operating lease expense was $8 million and $7 million, respectively.
Supplemental cash flow information related to leases was as follows (in thousands):
Six months ended July 31,
20232022
Cash paid for operating lease liabilities$6,135 $7,834 
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities2,327 14,272 
Supplemental balance sheet information related to operating leases was as follows (in thousands, except lease term and discount rate):
July 31, 2023January 31, 2023
Weighted Average Remaining Lease Term6.6 years6.7 years
Weighted Average Discount Rate4.2 %4.2 %
As of July 31, 2023, remaining maturities of operating lease liabilities are as follows (in thousands):
Fiscal Year
Remaining for 2024$3,083 
202511,414 
202610,597 
20279,554 
20289,058 
Thereafter25,879 
Total operating lease payments69,585 
Less imputed interest(11,080)
Total operating lease liabilities$58,505 

Veeva Systems Inc. | Form 10-Q
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Note 11. Stockholders’ Equity
Automatic Conversion

As of July 31, 2023, we had 146,124,701 shares of Class A common stock and 14,497,917 shares of Class B common stock outstanding.
All the outstanding shares of Class B common stock will automatically convert into shares of Class A common stock upon the earliest to occur of the following: (i) the election of the holders of a majority of the then-outstanding shares of Class B common stock or (ii) October 15, 2023. Following such conversion, each share of common stock will have one vote per share and the rights of the holders of all outstanding common stock will be identical.
Stock Option Activity
A summary of stock option activity for the six months ended July 31, 2023 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, 202311,503,409 $128.62 5.9$705 
Options granted2,415,542 180.12 
Options exercised(2,021,443)18.91 
Options forfeited/cancelled(297,749)196.95 
Options outstanding at July 31, 202311,599,759 $156.71 7.1$633 
Options vested and exercisable at July 31, 20234,750,459 $124.90 5.6$412 
Options vested and exercisable at July 31, 2023 and expected to vest thereafter11,599,759 $156.71 7.1$633 
The options granted during the six months ended July 31, 2023 were predominantly made in connection with our annual performance review cycle. The weighted average grant-date fair value of options granted was $89.64 and $80.80 per option for the three and six months ended July 31, 2023, respectively.
As of July 31, 2023, there was $438 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 July 31, 2023, 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 $23 million and $326 million for the three and six months ended July 31, 2023, respectively.
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Veeva Systems Inc. | Form 10-Q
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 July 31,Six months ended July 31,
2023202220232022
Volatility40%-41%38%-39%39%-41%37%-39%
Expected term (in years)6.256.256.25-76-7
Risk-free interest rate3.47%-3.97%2.90%-3.30%3.34 %-3.99 %1.90 %-3.30 %
Dividend yield—%—%—%—%
Restricted Stock Units
A summary of restricted stock unit (RSU) activity for the six months ended July 31, 2023 is as follows:
Unreleased restricted
stock units
Weighted 
average grant
date fair value
Balance at January 31, 20231,103,679 $194.36 
RSUs granted1,128,950 180.28 
RSUs vested(555,035)187.33 
RSUs forfeited/cancelled(73,911)183.20 
Balance at July 31, 20231,603,683 187.40 
As of July 31, 2023, there was a total of $243 million in unrecognized compensation cost related to unvested RSUs. This cost is expected to be recognized over a weighted-average period of approximately 1.6 years. The total intrinsic value of RSUs vested was $58 million and $105 million for the three and six months ended July 31, 2023, respectively.
Note 12. Net Income per Share