Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

VEEVA SYSTEMS INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm			53
Consolidated Balance Sheets			55
Consolidated Statements of Comprehensive Income			57
Consolidated Statements of Stockholders' Equity			57
Consolidated Statements of Cash Flows			59
Notes to Consolidated Financial Statements			60

Veeva Systems Inc. | Form 10-K			53

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Veeva Systems Inc.:

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Veeva Systems Inc. and subsidiaries (the Company) as of January 31, 2021 and 2020, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended January 31, 2021, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of January 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended January 31, 2021, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2021 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of February 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Controls Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,

54			Veeva Systems Inc. | Form 10-K

accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the sufficiency of audit evidence over revenue

As discussed in Note 1 to the consolidated financial statements, the Company recorded $1,465 million of total revenues for the year ended January 31, 2021, of which $1,179 million was subscription services related, and $286 million was professional services related. Each of these categories of revenue has multiple service offerings, and the Company’s process for revenue recognition differs between them.

We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter. Evaluating the nature and extent of audit evidence obtained over revenue for each service offering required subjective auditor judgment because of the multiple service offerings and the number of information technology (IT) applications involved in the revenue recognition processes.

The following are the primary procedures we performed to address the critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over revenue, including the determination of the revenue for service offerings. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue recognition process. We assessed the recorded revenue by selecting transactions and comparing the amounts recognized for consistency with underlying documentation, including contracts with customers. We involved IT professionals with specialized skills and knowledge, who assisted in testing certain IT applications that are used by the Company in its revenue recognition process. In addition, we evaluated the sufficiency of audit evidence obtained over revenue by assessing the results of procedures performed, including the nature and extent of such evidence.

/s/ KPMG LLP

We have served as the Company’s auditor since 2010.

Santa Clara, California

March 30, 2021

Veeva Systems Inc. | Form 10-K			55

VEEVA SYSTEMS INC.

CONSOLIDATED BALANCE SHEETS

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

			January 31, 2021						January 31, 2020
Assets
Current assets:
Cash and cash equivalents			$	730,504					$	476,733
Short-term investments			933,122						610,015
Accounts receivable, net of allowance for doubtful accounts of $193 and $617, respectively			564,387						389,690
Unbilled accounts receivable			47,206						32,817
Prepaid expenses and other current assets			35,607						21,869
Total current assets			2,310,826						1,531,124
Property and equipment, net			53,650						54,752
Deferred costs, net			42,072						35,585
Lease right-of-use assets			56,917						49,132
Goodwill			436,029						438,529
Intangible assets, net			114,595						134,601
Deferred income taxes			14,100						11,870
Other long-term assets			17,878						16,184
Total assets			$	3,046,067					$	2,271,777
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable			$	23,253					$	19,420
Accrued compensation and benefits			30,410						25,619
Accrued expenses and other current liabilities			30,982						21,620
Income tax payable			2,590						5,613
Deferred revenue			616,992						468,887
Lease liabilities			11,725						10,013
Total current liabilities			715,952						551,172
Deferred income taxes			1,835						2,417
Lease liabilities, noncurrent			51,393						44,815
Other long-term liabilities			10,567						7,779
Total liabilities			779,747						606,183
Commitments and contingencies (note 15)
Stockholders’ equity:
Class A common stock, $0.00001 par value; 800,000,000 shares authorized, 137,062,817 and 133,892,725 issued and outstanding at January 31, 2021 and January 31, 2020, respectively			2						1
Class B common stock, $0.00001 par value; 190,000,000 shares authorized, 14,993,991 and 15,202,858 issued and outstanding at January 31, 2021 and January 31, 2020, respectively			—						—
Additional paid-in capital			965,670						745,475
Accumulated other comprehensive income			992						460
Retained earnings			1,299,656						919,658
Total stockholders’ equity			2,266,320						1,665,594
Total liabilities and stockholders’ equity			$	3,046,067					$	2,271,777

See Notes to Consolidated Financial Statements.

56			Veeva Systems Inc. | Form 10-K

VEEVA SYSTEMS INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

									Fiscal year ended January 31,
															2021						2020						2019
Revenues:
Subscription services															$	1,179,486					$	896,294					$	694,467
Professional services and other															285,583						207,787						167,743
Total revenues															1,465,069						1,104,081						862,210
Cost of revenues**(1)****:**
Cost of subscription services															184,589						136,328						117,009
Cost of professional services and other															224,339						167,041						128,272
Total cost of revenues															408,928						303,369						245,281
Gross profit															1,056,141						800,712						616,929
Operating expenses**(1)****:**
Research and development															294,220						209,895						158,783
Sales and marketing															235,014						190,331						148,867
General and administrative															149,113						114,267						86,413
Total operating expenses															678,347						514,493						394,063
Operating income															377,794						286,219						222,866
Other income, net															16,199						27,478						15,777
Income before income taxes															393,993						313,697						238,643
Provision for income taxes															13,995						12,579						8,811
Net income															$	379,998					$	301,118					$	229,832
Net income, basic and diluted															$	379,998					$	301,118					$	229,832
Net income per share:
Basic															$	2.52					$	2.04					$	1.59
Diluted															$	2.36					$	1.90					$	1.47
Weighted-average shares used to compute net income per share:
Basic															150,666						147,796						144,244
Diluted															160,732						158,296						156,117
Other comprehensive income:
Net change in unrealized gain on available-for-sale investments															$	985					$	2,388					$	1,409
Net change in cumulative foreign currency translation loss															(453)						(2,857)						(2,081)
Comprehensive income															$	380,530					$	300,649					$	229,160

(1) Includes stock-based compensation as follows:
Cost of revenues:
Cost of subscription services															$	4,840					$	2,638					$	1,553
Cost of professional services and other															27,698						17,518						10,575
Research and development															63,541						37,001						22,138
Sales and marketing															40,574						27,537						18,381
General and administrative															48,348						31,212						23,778
Total stock-based compensation															$	185,001					$	115,906					$	76,425

See Notes to Financial Statements.

Veeva Systems Inc. | Form 10-K			57

VEEVA SYSTEMS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

			Class A & B common stock												Additional paid-in capital						Retained earnings						Accumulated other comprehensive income						Total stockholders’ equity
			Shares						Amount
Balance at January 31, 2018			142,069,396						$	1					$	515,272					$	389,365					$	1,600					$	906,238
Issuance of common stock upon exercise of stock options			2,807,092						—						25,554						—						—						25,554
Issuance of common stock upon vesting of restricted stock units			1,313,591						—						—						—						—						—
Stock-based compensation expense			—						—						76,797						—						—						76,797
Other comprehensive income			—						—						—						—						(672)						(672)
Net income			—						—						—						229,832						—						229,832
Balance at January 31, 2019			146,190,079						$	1					$	617,623					$	619,197					$	928					$	1,237,749
Cumulative effect adjustment for Topic 842 adoption(1)			—						—						—						(657)						—						(657)
Issuance of common stock upon exercise of stock options			1,665,778						—						10,899						—						—						10,899
Issuance of common stock upon vesting of restricted stock units			1,239,726						—						—						—						—						—
Replacement award value in connection with business combination			—						—						657						—						—						657
Stock-based compensation expense			—						—						116,296						—						—						116,296
Other comprehensive income			—						—						—						—						(468)						(468)
Net income			—						—						—						301,118						—						301,118
Balance at January 31, 2020			149,095,583						$	1					$	745,475					$	919,658					$	460					$	1,665,594
Issuance of common stock upon exercise of stock options			1,839,723						1						34,815						—						—						34,816
Issuance of common stock upon vesting of restricted stock units			1,121,502						—						—						—						—						—
Stock-based compensation expense			—						—						185,380						—						—						185,380
Other comprehensive income			—						—						—						—						532						532
Net income			—						—						—						379,998						—						379,998
Balance at January 31, 2021			152,056,808						$	2					$	965,670					$	1,299,656					$	992					$	2,266,320
(1) We adopted Accounting Standards Update (ASU) 2016-02, “Leases” (Topic 842) using the modified retrospective method as of February 1, 2019 and elected the transition option that allows us not to restate the comparative periods in our financial statements in the year of adoption.

See Notes to Consolidated Financial Statements.

58			Veeva Systems Inc. | Form 10-K

VEEVA SYSTEMS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

									Fiscal year ended January 31,
												2021						2020						2019
Cash flows from operating activities
Net income															$	379,998					$	301,118					$	229,832
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization															29,455						19,859						14,071
Reduction of operating lease right-of-use assets															10,347						7,966						—
Amortization (accretion) of discount on short-term investments															3,134						(3,274)						(2,431)
Stock-based compensation															185,001						115,906						76,425
Amortization of deferred costs															20,677						20,521						18,378
Deferred income taxes															(1,048)						(6,663)						(8,091)
Gain on foreign currency from mark-to-market derivative															(365)						(120)						(177)
Bad debt (recovery) expense															(307)						244						198
Changes in operating assets and liabilities:
Accounts receivable															(174,067)						(55,531)						(78,995)
Unbilled accounts receivable															(14,387)						(14,555)						(4,774)
Deferred costs															(27,164)						(25,237)						(18,941)
Income taxes payable															(3,023)						1,131						637
Prepaid expenses and other current and long-term assets															(12,424)						(2,700)						(10,562)
Accounts payable															754						2,813						1,822
Accrued expenses and other current liabilities															13,889						(15,230)						963
Deferred revenue															147,479						97,753						89,416
Operating lease liabilities															(9,129)						(7,480)						—
Other long-term liabilities															2,426						854						3,056
Net cash provided by operating activities															551,246						437,375						310,827
Cash flows from investing activities
Purchases of short-term investments															(979,292)						(752,518)						(726,379)
Maturities and sales of short-term investments															654,341						688,091						632,329
Acquisitions, net of cash and restricted cash acquired															—						(448,162)						—
Long-term assets															(8,683)						(4,321)						(9,819)
Net cash used in investing activities															(333,634)						(516,910)						(103,869)
Cash flows from financing activities
Changes in lease liabilities - finance leases															(1,039)						(984)						—
Proceeds from exercise of common stock options															34,857						10,994						25,910
Net cash provided by financing activities															33,818						10,010						25,910
Effect of exchange rate changes on cash, cash equivalents, and restricted cash															484						(2,856)						(2,077)
Net change in cash, cash equivalents, and restricted cash															251,914						(72,381)						230,791
Cash, cash equivalents, and restricted cash at beginning of period															479,797						552,178						321,387
Cash, cash equivalents, and restricted cash at end of period															$	731,711					$	479,797					$	552,178
Cash, cash equivalents, and restricted cash at end of period:
Cash and cash equivalents															$	730,504					$	476,733					$	550,971
Restricted cash included in other long-term assets															1,207						3,064						1,207
Total cash, cash equivalents, and restricted cash at end of period															$	731,711					$	479,797					$	552,178
Supplemental disclosures of other cash flow information:
Cash paid for income taxes, net of refunds															$	18,096					$	14,289					$	19,541
Excess tax benefits from employee stock plans															$	80,661					$	50,411					$	45,830
Non-cash investing activities:
Changes in accounts payable and accrued expenses related to property and equipment purchases															$	3,165					$	567					$	644

See Notes to Consolidated Financial Statements.

Veeva Systems Inc. | Form 10-K			59

VEEVA SYSTEMS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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. We were founded in 2007 on the premise that industry-specific cloud solutions could best address the operating challenges and regulatory requirements of life sciences companies. Our solutions 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) 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, regulatory, quality, 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 three regulated industries: consumer goods, chemicals, and cosmetics. Our fiscal year end is January 31.

Principles of Consolidation and Basis of Presentation

These 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 annual financial reporting and include the accounts of our wholly-owned subsidiaries after elimination of intercompany accounts and transactions.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that affect the consolidated financial statements and the notes thereto. These estimates are based on information available as of the date of the 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 fair value of assets acquired and liabilities assumed for business combinations; and

• the fair value of our stock-based awards.

As future events cannot be determined with precision, actual results could differ significantly from those estimates.

Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. We define the term “chief operating decision maker” to be our Chief Executive Officer. Our Chief Executive Officer reviews the financial information presented on a consolidated basis for purposes of allocating resources and evaluating our financial performance. Accordingly, we have determined that we operate in a single reportable operating segment. Since we operate in one operating segment, all required financial segment information can be found in the consolidated financial statements.

60			Veeva Systems Inc. | Form 10-K

Revenue Recognition

We derive our revenues primarily from subscription services and professional services. 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, configuration, data services, training, and managed services related to our solutions. Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

We determine revenue recognition through the following steps:

• Identification of the contract, or contracts, with a customer;

• Identification of the performance obligations in the contract;

• Determination of the transaction price;

• Allocation of the transaction price to the performance obligations in the contract; and

• Recognition of revenue when, or as, we satisfy a performance obligation.

Our subscription services agreements are generally non-cancelable during the term, although customers typically have the right to terminate their agreements for cause in the event of material breach.

Subscription Services Revenues

Subscription services revenues are recognized ratably over the respective non-cancelable subscription term because of the continuous transfer of control to the customer. Our subscription arrangements are considered service contracts, and the customer does not have the right to take possession of the software.

Professional Services and Other Revenues

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 revenues 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.

Contracts with Multiple Performance Obligations

Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately when they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and other factors, including other groupings such as customer type and geography.

Deferred Costs

Deferred costs represents sales commissions associated with obtaining a contract with a customer. These costs are deferred and then amortized over a period of benefit that we have determined to be three years. We determined the period of benefit by taking into consideration the expected renewal period of our customer contracts, our technology and other factors. Amortization expense is included in sales and marketing expenses in the accompanying consolidated statements of comprehensive income.

Certain Risks and Concentrations of Credit Risk

Our revenues are derived from subscription services, professional services and other services delivered primarily to the life sciences industry. We operate in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the emergence of competitive products or services with new capabilities, and other factors could negatively impact our future operating results.

Our financial instruments that potentially subject us to concentration of credit risk consist primarily of cash and cash equivalents, short-term investments and trade accounts receivable. Our cash equivalents and short-term investments are held by established financial institutions. We have established guidelines relative to credit ratings,

Veeva Systems Inc. | Form 10-K			61

diversification and maturities that seek to maintain safety and liquidity. Deposits in these financial institutions may significantly exceed federally insured limits.

We do not require collateral from our customers and generally require payment within 30 days to 60 days of billing.

The following customers individually exceeded 10% of total accounts receivable as of the dates shown:

			January 31,
			2021						2020
Customer 1			12%						14%

No single customer represented over 10% of our total revenues for any of the years presented.

Cash Equivalents

We consider all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Short-term Investments

Our short-term investments are classified as available-for-sale and recorded at estimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive income, a component of stockholders’ equity. We evaluate our investments to assess whether those with unrealized loss positions are other than temporarily impaired. We consider impairments to be other than temporary if they are related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of their cost basis. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method and are reported in other income, net, in the consolidated statements of comprehensive income. Interest, amortization of premiums, and accretion of discount on all short-term investments are also included as a component of other income, net, in the consolidated statements of comprehensive income.

We may sell our short-term investments at any time, without significant penalty, for use in current operations or for other purposes, even if they have not yet reached maturity. As a result, we classify our investments, including securities with maturities beyond 12 months, as current assets in the accompanying consolidated balance sheets.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts, which is not material.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets and commences once the asset is placed in service or ready for its intended use. Land is not depreciated. The estimated useful lives by asset classification are as follows:

Building						30 years
Land and building improvements						10 years			(land improvements) and estimated useful life of building (building improvements)
Equipment and computers						3 years
Furniture and fixtures						5 years
Leasehold improvements						Shorter of remaining life of the lease term or estimated useful life

Leases

We have operating and finance leases for corporate offices and certain equipment. Additionally, we are the sublessor for certain office space.

We adopted Accounting Standards Update (ASU) 2016-02 “Leases” (Topic 842) using the modified retrospective method as of February 1, 2019 with an immaterial amount of cumulative effect adjustment recorded to our retained earnings. Consequently, financial information for dates and periods before February 1, 2019 remain unchanged.

62			Veeva Systems Inc. | Form 10-K

Subsequent to our adoption of Topic 842, we recognize lease right-of-use assets and liabilities at the commencement date based on the present value of lease payments over the lease term. We use an estimate of our discount rate based on the information available at the lease commencement date in determining the present value of lease payments, unless the implicit rate is readily determinable. The lease right-of-use assets also include any lease payments made and exclude lease incentives such as tenant improvement allowances. Options to extend or terminate the lease are included in the lease term when it is reasonably certain that we will exercise the extension or termination option.

Our operating leases typically include non-lease components such as common-area maintenance costs. We have elected to exclude non-lease components from lease payments for the purpose of calculating lease right-of-use assets and liabilities and these are expensed as incurred as variable lease payments.

Leases with a term of one year or less are not recognized on our consolidated balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

Internal-Use Software

We capitalize certain costs incurred for the development of computer software for internal use. We capitalize these costs during the development of the project, when it is determined that it is probable that the project will be completed and the software will be used as intended. Costs related to preliminary project activities, post-implementation activities, training, and maintenance are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life of three years, and the amortization expense is recorded as a component of cost of subscription services. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Goodwill and Intangible Assets

Goodwill is tested for impairment annually in the fourth quarter of each year or if circumstances indicate the carrying value of goodwill is impaired.

We have one reporting unit and evaluate goodwill for impairment at the entity level. We completed our annual impairment test in our fourth quarter of the fiscal year ended January 31, 2021, which resulted in no impairment of the goodwill balance.

All other intangible assets associated with purchased intangibles, consisting of existing technology, databases, customer relationships, software, trade names and trademarks, data supplier and partner relationships, non-competition agreements, brand, and backlog are stated at cost less accumulated amortization and are amortized on a straight-line basis over their estimated remaining economic lives. Amortization expense related to existing technology, databases, data supplier and partner relationships, software, and backlog is included in cost of subscription services. Amortization expense related to customer relationships, trade names and trademarks, and brand are included in sales and marketing expense. Amortization expense related to non-competition agreements are included in both general and administrative and research and development expense.

Long-Lived Assets

Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, we first compare undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. There were no impairment charges recognized during any of the periods presented.

Business Combinations

The purchase price in a business combination is assigned to the estimated acquisition date fair values of the tangible and intangible assets acquired and the liabilities assumed with the residual recorded as goodwill. Critical estimates in valuing certain of the intangible assets include, but are not limited to, the net present value of future

Veeva Systems Inc. | Form 10-K			63

expected cash flows, future revenue growth, margins, customer retention rates, technology life, royalty rates, expected use of acquired assets, and discount rates.

Stock-based Compensation

We recognize compensation expense for all stock-based awards, including stock options and restricted stock units (RSUs), based on the estimate of fair value of the award at the grant date. The fair value of each option award is estimated on the grant date using either a Black-Scholes option-pricing model or a Monte Carlo simulation, to the extent market conditions exist, and a single option award approach. These models require that at the date of grant we determine the fair value of the underlying common stock, the expected term of the award, the expected volatility of the price of our common stock, risk-free interest rates, and expected dividend yield of our common stock. The fair value of each RSU award is measured based on the closing stock price of our common stock on the date of grant. We account for forfeitures as they occur. The compensation expense is recognized using a straight-line basis over the requisite service periods of the awards, which is generally four to nine years.

Cost of Revenues

Cost of subscription services revenues consists of expenses related to our computing infrastructure provided by third parties, including salesforce.com and Amazon Web Services, personnel-related costs associated with hosting our subscription services and providing support including our data stewards, data acquisition costs, and allocated overhead, amortization expense associated with capitalized internal-use software related to our subscription services, and amortization expense associated with purchased intangibles related to our subscription services. Cost of subscription services revenues for Veeva CRM and certain of our multichannel customer relationship management applications include fees paid to salesforce.com for our use of the Salesforce Platform and the associated hosting infrastructure and data center operations that are provided by salesforce.com.

Cost of professional services and other revenues consists primarily of employee-related expenses associated with providing these services, including salaries, benefits and stock-based compensation expense, the cost of third-party subcontractors, travel costs, and allocated overhead.

Advertising Expenses

Advertising expenditures are expensed as incurred and were immaterial for each of the years presented.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We regularly assess the realizability of our deferred tax assets and establish a valuation allowance if it is more-likely-than-not that some or all of our deferred tax assets will not be realized. We evaluate and weigh all available positive and negative evidence such as historic results, future reversals of existing deferred tax liabilities, projected future taxable income, as well as prudent and feasible tax-planning strategies. Generally, more weight is given to objectively verifiable evidence such as the cumulative income in recent years.

We establish liabilities or reduce assets for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining whether the weight of available evidence indicates that it is more likely than not that the position will be sustained upon an audit, including resolution of related appeals or litigation processes, if any. The second step requires us to measure the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement. We recognize interest accrued and penalties related to unrecognized tax benefits as a component of provision for income taxes.

64			Veeva Systems Inc. | Form 10-K

Foreign Currency Exchange

Adjustments resulting from translating financial statements for those entities that do not have U.S. dollars as their functional currency are recorded as part of a separate component of the consolidated statements of comprehensive income. All assets and liabilities denominated in non-functional currency are translated into the functional currency at the exchange rate on the balance sheet date. Revenues and expenses are translated at the average exchange rate during the period. Equity transactions are translated using historical exchange rates. Foreign currency transaction gains and losses are included in the consolidated statements of comprehensive income for the period.

Indemnification

Our contracts generally include provisions for indemnifying customers against liabilities if our solutions infringe a third party’s intellectual property rights, and we may also incur liabilities if we breach the security and/or confidentiality obligations in our contracts. To date, we have not incurred any material costs, and we have not accrued any liabilities in the accompanying consolidated financial statements as a result of these obligations.

Loss Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment or remediation can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

New Accounting Pronouncements Adopted in Fiscal 2021

Cloud Computing Arrangements

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (Topic 350-40), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new standard requires capitalized costs to be amortized on a straight-line basis generally over the term of the arrangement, and the financial statement presentation for these capitalized costs would be the same as that of the fees related to the hosting arrangements. We adopted this standard on a prospective basis as of February 1, 2020 and it did not have a material impact on our consolidated financial statements.

Credit Losses

In June 2016, the Financial Accounting Standards Board, or FASB, issued ASU 2016-13, including subsequent amendments, regarding “Measurement of Credit Losses on Financial Instruments” (Topic 326), which modifies the accounting methodology for most financial instruments. The guidance establishes a new “expected loss model” that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. For trade receivables and other financial assets, we are required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Additionally, any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. We adopted this standard on a modified retrospective basis as of February 1, 2020. The adoption of this standard did not result in any cumulative effect adjustment on our consolidated financial statements.

Note 2. Acquisitions

Crossix

On November 1, 2019, we acquired 100% ownership of Crossix in exchange for total consideration of $428 million, which includes the impact of adjustments to purchase price associated with the cash and net working capital of the acquired entity at close. In addition, we granted certain Crossix employees equity retention awards valued at approximately $120 million in the aggregate, which will be expensed as share-based compensation over the remaining service period. Crossix brings Veeva additional depth in patient data and data analytics. Crossix’s existing data analytics offerings are complementary to our existing Commercial Cloud offerings, and we are using the Crossix Data Platform to build Veeva Data Cloud, our longitudinal U.S. patient data offering.

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The following table summarizes the estimated fair values of the assets acquired, useful lives, and liabilities assumed at the acquisition date (in thousands):

									Useful life												Fair value
Net assets acquired																					$	4,766
Identifiable intangible assets:
Customer relationships									10 years												70,100
Existing technology									6 years												19,200
Trade name and trademarks									5 years												13,200
Other intangibles									1			to			7 years						6,000
Total purchased intangible assets																					108,500
Goodwill																					314,642
Total purchase consideration																					$	427,908

The following unaudited pro forma information presents the combined results of operations for the periods presented as if the acquisition had been completed on February 1, 2018, the beginning of the comparable prior annual reporting period. The unaudited pro forma results include the amortization associated with estimates for the purchased intangible assets and stock-based compensation expense associated with the retention awards granted.

The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies. Accordingly, these unaudited pro forma results are presented for information purpose only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations (in thousands):

															Fiscal year ended January 31,
									2020						2019
Pro forma revenues															$	1,153,497					$	913,081
Pro forma net income															$	278,215					$	201,382
Pro forma net income per share:
Basic															$	1.88					$	1.40
Diluted															$	1.76					$	1.29

Physicians World

On November 7, 2019, we completed our acquisition of Physicians World in exchange for total cash consideration of $41 million, which includes the impact of adjustments to purchase price associated with the cash and net working capital of the acquired entity at close. In addition, we granted certain Physicians World employees equity retention awards valued at approximately $15 million in the aggregate. The acquisition of Physicians World makes it easier for our customers to get industry leading cloud software and services from a single vendor. Pro forma results of operations have not been presented because the effect of this acquisition was not material to our consolidated financial statements.

The following table summarizes the estimated fair values of the assets acquired, useful lives, and liabilities assumed at the acquisition date (in thousands):

									Useful life												Fair value
Net assets acquired																					$	1,221
Identifiable intangible assets:
Customer relationships									10 years												$7,700
Existing technology									6 years												3,300
Trade name and trademarks									5 years												700
Total purchased intangible assets																					11,700
Goodwill																					28,083
Total purchase consideration																					$	41,004

66			Veeva Systems Inc. | Form 10-K

Note 3. Short-Term Investments

At January 31, 2021, 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			$	17,350					$	15					$	(1)					$	17,364
Asset-backed securities			125,833						745						(2)						126,576
Commercial paper			57,390						8						(2)						57,396
Corporate notes and bonds			428,710						2,360						(23)						431,047
Foreign government bonds			31,855						45						(2)						31,898
U.S. agency obligations			52,756						119						—						52,875
U.S. treasury securities			215,379						587						—						215,966
Total available-for-sale securities			$	929,273					$	3,879					$	(30)					$	933,122

At January 31, 2020, 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			$	3,500					$	3					$	—					$	3,503
Asset-backed securities			100,419						396						(1)						100,814
Commercial paper			19,965						5						(1)						19,969
Corporate notes and bonds			234,664						1,552						(2)						236,214
Foreign government bonds			3,397						10						—						3,407
U.S. treasury securities			245,509						599						—						246,108
Total available-for-sale securities			$	607,454					$	2,565					$	(4)					$	610,015

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):

			January 31,
			2021						2020
Due in one year or less			$	428,155					$	247,592
Due in greater than one year			504,967						362,423
Total short-term investments			$	933,122					$	610,015

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. We intend to hold our securities to maturity and it is more likely than not we will hold these securities until recovery of the cost basis.

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The following table shows the fair values of available-for-sale securities which were in an unrealized loss position, aggregated by investment category, as of January 31, 2021 (in thousands):

			Held for less than 12 months
			Fair value						Gross unrealized losses
Certificates of deposits			$	3,749					$	(2)
Asset-backed securities			3,318						(1)
Commercial paper			17,626						(2)
Corporate notes and bonds			29,558						(23)
Foreign government bonds			2,679						(2)

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, 2020 (in thousands):

			Held for less than 12 months
			Fair value						Gross unrealized losses
Asset-backed securities			999						(1)
Commercial paper			5,589						(1)
Corporate notes and bonds			6,104						(2)

Asset values and gross unrealized losses of available-for-sale securities held for more than 12 months as of January 31, 2021 and 2020 were immaterial. There were no impairments considered other-than-temporary as of January 31, 2021 and 2020 as it is more likely than not we will hold these securities until recovery of the cost basis.

Note 4. Deferred Costs

Deferred costs, which consists of deferred sales commissions, were $42 million and $36 million as of January 31, 2021 and January 31, 2020, respectively. Amortization expense for the deferred costs included in sales and marketing expenses in the consolidated statements of comprehensive income was $21 million, $21 million, and $18 million for the fiscal years ended January 31, 2021, 2020, and 2019, respectively. There have been no impairment losses recorded in relation to the costs capitalized for any period presented.

Note 5. Property and Equipment, Net

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

			January 31,
			2021						2020
Land			$	3,040					$	3,040
Building			20,984						20,984
Land improvements and building improvements			22,392						22,392
Equipment and computers			8,847						11,066
Furniture and fixtures			13,452						12,849
Leasehold improvements			13,945						9,385
Construction in progress			606						386
			83,266						80,102
Less accumulated depreciation			(29,616)						(25,350)
Total property and equipment, net			$	53,650					$	54,752

Total depreciation expense was $9 million, $9 million, and $6 million for the fiscal years ended January 31, 2021, 2020, and 2019, respectively. Land is not depreciated.

68			Veeva Systems Inc. | Form 10-K

Note 6. Goodwill and Intangible Assets

Goodwill was $436 million and $439 million as of January 31, 2021 and January 31, 2020, respectively.

The following schedule presents the details of intangible assets as of January 31, 2021 (dollar amounts in thousands):

			January 31, 2021
Gross carrying amount						Accumulated amortization						Net						Remaining useful life (in years)
Existing technology			$	26,180					$	(8,367)					$	17,813					4.8
Customer relationships			110,643						(27,741)						82,902						8.0
Trade name and trademarks			13,900						(4,005)						9,895						3.8
Other intangibles			20,453						(16,468)						3,985						5.1
Total intangible assets			$	171,176					$	(56,581)					$	114,595

The following schedule presents the details of intangible assets as of January 31, 2020 (dollar amounts in thousands):

			January 31, 2020
Gross carrying amount						Accumulated amortization						Net						Remaining useful life (in years)
Existing technology			$	26,380					$	(4,808)					$	21,572					5.8
Customer relationships			111,443						(17,575)						93,868						9.0
Trade name and trademarks			13,900						(720)						13,180						4.7
Other intangibles			22,947						(16,966)						5,981						5.0
Total intangible assets			$	174,670					$	(40,069)					$	134,601

Amortization expense associated with intangible assets was $20 million, $10 million, and $7 million for the fiscal years ended January 31, 2021, 2020, and 2019 respectively.

As of January 31, 2021, the estimated amortization expense for intangible assets, for the next five years and thereafter is as follows (in thousands):

Fiscal 2022						$	18,163
Fiscal 2023						18,163
Fiscal 2024						18,160
Fiscal 2025						17,417
Fiscal 2026						13,166
Thereafter						29,526
Total						$	114,595

The following schedule presents the details of goodwill as of January 31, 2021:

Balance as of January 31, 2019						$	95,804
Goodwill from Crossix acquisition						314,642
Goodwill from Physicians World acquisition						28,083
Balance as of January 31, 2020						438,529
Purchase price goodwill reduction from Crossix tax adjustments						(2,500)
Balance as of January 31, 2021						$	436,029

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Note 7. Accrued Expenses

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

			January 31,
			2021						2020
Accrued commissions			$	7,498					$	8,951
Accrued bonus			4,134						4,329
Accrued vacation			4,716						3,921
Payroll tax payable			10,250						7,353
Accrued other compensation and benefits			3,812						1,065
Total accrued compensation and benefits			$	30,410					$	25,619
Accrued fees payable to salesforce.com			$	6,381					$	5,787
Taxes payable			13,598						4,914
Accrued third-party professional services subcontractors' fees			1,515						1,338
Other accrued expenses			9,488						9,581
Total accrued expenses and other current liabilities			$	30,982					$	21,620

Note 8. 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 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.

70			Veeva Systems Inc. | Form 10-K

The following table presents the fair value hierarchy for financial assets measured at fair value on a recurring basis as of January 31, 2021 (in thousands):

						Level 1						Level 2												Total
Assets
Cash equivalents:
Money market funds						$	259,937					$	—											$	259,937
U.S. Treasury securities						—						15,520												15,520
Short-term investments:
Certificates of deposits						—						17,364												17,364
Asset-backed securities						—						126,576												126,576
Commercial paper						—						57,396												57,396
Corporate notes and bonds						—						431,047												431,047
Foreign government bonds						—						31,898												31,898
U.S. agency obligations						—						52,875												52,875
U.S. Treasury securities						—						215,966												215,966
Foreign currency derivative contracts						—						440												440
Total financial assets						$	259,937					$	949,082											$	1,209,019
Liabilities
Foreign currency derivative contracts						$	—					$	72											$	72
Total financial liabilities						$	—					$	72											$	72

The following table presents the fair value hierarchy for financial assets measured at fair value on a recurring basis as of January 31, 2020 (in thousands):

						Level 1						Level 2												Total
Assets
Cash equivalents:
Money market funds						$	24,107					$	—											$	24,107
Commercial paper						—						1,616												1,616
Corporate notes and bonds						—						2,245												2,245
Short-term investments:
Certificates of deposits						—						3,503												3,503
Asset-backed securities						—						100,815												100,815
Commercial paper						—						19,969												19,969
Corporate notes and bonds						—						236,214												236,214
Foreign government bonds						—						3,407												3,407
U.S. Treasury securities						—						246,107												246,107
Foreign currency derivative contracts						—						75												75
Total financial assets						$	24,107					$	613,951											$	638,058
Liabilities
Foreign currency derivative contracts						$	—					$	42											$	42
Total financial liabilities						$	—					$	42											$	42

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

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Balance Sheet Hedges

We enter into foreign currency forward contracts in order to hedge our foreign currency exposure. We account for derivative instruments at fair value with changes in the fair value recorded as a component of other income, net, in our consolidated statements of comprehensive income. Cash flows from such forward contracts are classified as operating activities. The realized foreign currency losses were $2 million for the fiscal year ended January 31, 2021 and were immaterial for the fiscal years ended January 31, 2020 and 2019.

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

			January 31,
			2021						2020
Notional amount of foreign currency derivative contracts			$	52,516					$	7,304
Fair value of foreign currency derivative contracts			52,148						7,271

Derivatives not designated as hedging instruments are presented as components of the following balance sheet items for the periods shown as follows (in thousands):

									January 31,
			Balance sheet presentation						2021						2020
Foreign currency derivative contracts - assets			Prepaid expenses and other current assets						$	440					$	75
Foreign currency derivative contracts - liabilities			Accrued expenses						72						42

Note 9. Income Taxes

The components of income before income taxes by U.S. and foreign jurisdictions were as follows for the periods shown (in thousands):

			Fiscal year ended January 31,
			2021						2020						2019
United States			$	378,042					$	305,339					$	222,743
Foreign			15,951						8,358						15,900
Total			$	393,993					$	313,697					$	238,643

The majority of our revenues from international sales are invoiced from and collected by our U.S. entity and recognized as a component of income before taxes in the United States as opposed to a foreign jurisdiction.

Provision for income taxes consisted of the following for the periods shown (in thousands):

			Fiscal year ended January 31,
			2021						2020						2019
Current provision:
Federal			$	7,108					$	11,143					$	5,466
State			4,763						4,695						4,089
Foreign			2,825						3,404						7,438
Total current provision			14,696						19,242						16,993
Deferred provision:
Federal			(816)						(1,063)						(1,910)
State			681						(517)						(619)
Foreign			(566)						(5,083)						(5,653)
Total deferred provision			(701)						(6,663)						(8,182)
Provision for income taxes			$	13,995					$	12,579					$	8,811

72			Veeva Systems Inc. | Form 10-K

Provision for income taxes differed from the amount computed by applying the federal statutory income tax rate of 21% for each of the fiscal years ended January 31, 2021, 2020, and 2019 to income before income taxes as a result of the following for the periods shown (in thousands):

			Fiscal year ended January 31,
			2021						2020						2019
Federal tax statutory tax rate			$	82,739					$	65,876					$	50,115
State taxes			4,401						3,035						3,139
Tax credits			(24,617)						(23,468)						(21,415)
Stock-based compensation			(54,488)						(34,569)						(33,332)
Valuation allowance			10,269						7,408						6,666
Impact of foreign operations			(941)						470						3,381
Foreign derived intangible income deduction (FDII)			(5,134)						(4,836)						(2,086)
Others (1)			1,766						(1,337)						2,343
Provision for income taxes			$	13,995					$	12,579					$	8,811
(1) Note: Prior periods were adjusted due to prior period reclassifications

The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and liabilities related to the following (in thousands):

			January 31,
			2021						2020
Deferred tax assets:
Accruals and reserves			$	13,494					$	10,355
State income taxes			679						931
Stock-based compensation			11,486						9,861
Net operating loss carryforward			29,318						32,916
Tax credit carryforward			29,624						21,458
Lease liabilities			15,932						13,808
Other			298						217
Gross deferred tax assets			100,831						89,546
Valuation allowance			(31,318)						(22,694)
Total deferred tax assets			69,513						66,852
Deferred tax liabilities:
Property and equipment			(141)						(650)
Intangible assets			(30,253)						(33,518)
Expensed internal-use software			(893)						(974)
Lease right-of-use assets			(14,438)						(12,717)
Deferred costs			(10,588)						(8,922)
Other			(935)						(619)
Total deferred tax liabilities			(57,248)						(57,400)
Net deferred tax assets			$	12,265					$	9,452

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowance at the end of January 31, 2021 was primarily related to certain foreign and U.S. state deferred tax assets.

The net impact of our purchase price accounting allocation on our deferred tax assets and liabilities was immaterial.

As of January 31, 2021, the net operating loss carryforwards for federal, state, and foreign income tax purposes were approximately $82 million, $91 million, and $29 million, respectively. The federal net operating losses do not expire, while the state and foreign net operating losses begin to expire in 2031 and 2026, respectively.

As of January 31, 2021, we had $47 million of California research and development tax credits available to offset future taxes which do not expire.

Veeva Systems Inc. | Form 10-K			73

We evaluate tax positions for recognition using a more-likely than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. We classify unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as “other non-current liabilities” in the consolidated balance sheets. As of January 31, 2021, the total amount of gross unrecognized tax benefits was $19 million, of which $9 million, if recognized, would favorably impact our effective tax rate. The aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows for the periods shown (in thousands):

			Fiscal year ended January 31,
			2021						2020						2019
Beginning balance			$	14,515					$	12,597					$	11,398
Increases related to tax positions taken during the prior period			96						796						968
Increases related to tax positions taken during the current period			4,126						3,420						2,697
Decreases related to tax positions taken during the prior period			(51)						(128)						(1,754)
Audit settlements			—						—						(403)
Lapse of statute of limitations			(58)						(2,170)						(309)
Ending balance			$	18,628					$	14,515					$	12,597

Our policy is to classify interest and penalties associated with unrecognized tax benefits as a component of the provision for income taxes. Interest and penalties were not significant during fiscal year ended January 31, 2021.

We file tax returns in the United States for federal, California, and other states. Fiscal years ended January 31, 2017 and forward remain open to examination for federal income tax, and fiscal years ended January 31, 2016 and forward remain open to examination for California and other states. We file tax returns in multiple foreign jurisdictions. The fiscal years ended January 31, 2015 and forward remain open to examination in these foreign jurisdictions.

Note 10. Deferred Revenue, Performance Obligations, and Unbilled Accounts Receivable

From the deferred revenue balance at the beginning of the respective periods, we recognized $464 million, $353 million, and $265 million of subscription services revenue during the fiscal years ended January 31, 2021, 2020, and 2019, respectively. Professional services revenue recognized in the same periods from the 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-cancelable 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 January 31, 2021, approximately $1,287 million of revenue is expected to be recognized from remaining performance obligations for subscription services contracts. We expect to recognize revenue on approximately 76% of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.

Unbilled Accounts Receivable

Unbilled accounts receivable consists of (i) a receivable primarily for the revenue recognized for professional services performed but not yet billed, which was $20 million and $18 million as of January 31, 2021 and January 31, 2020, respectively, and (ii) a contract asset primarily for revenue recognized from non-cancelable, multi-year orders in which fees increase annually but for which we are not contractually able to invoice until a future period, which was $27 million and $15 million as of January 31, 2021 and January 31, 2020, respectively.

74			Veeva Systems Inc. | Form 10-K

Note 11. Leases

We have operating and finance leases for corporate offices, data centers, and certain equipment. Our leases have various expiration dates through 2030, some of which include options to extend the leases for up to nine years. Our finance lease obligations for the fiscal years ended January 31, 2021 and 2020 were immaterial. Additionally, we are the sublessor for certain office space. Our sublease income for the fiscal years ended January 31, 2021 and 2020 was immaterial.

For the fiscal years ended January 31, 2021, 2020, and 2019, our operating lease expense was $13 million, $8 million, and $6 million, respectively. Our finance lease expense was immaterial for the fiscal years ended January 31, 2021, 2020, and 2019.

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

			Fiscal year ended January 31,
			2021						2020
Cash paid for amounts included in the measurement of lease liabilities			$	11,401					$	7,657
Right-of-use assets obtained in exchange for lease obligations:
Operating leases			12,214						23,546
Operating leases obtained through business combinations			—						14,550

Supplemental balance sheet information related to operating leases was as follows (in thousands, except lease term and discount rate):

			January 31,
			2021						2020
Lease right-of-use assets			$	56,917					$	49,132
Lease liabilities			$	11,347					$	8,960
Lease liabilities, noncurrent			51,393						44,453
Total operating lease liabilities			$	62,740					$	53,413
Weighted Average Remaining Lease Term			6.7 years						7.1 years
Weighted Average Discount Rate			3.8		%				4.3		%

As of January 31, 2021, remaining maturities of operating lease liabilities are as follows (in thousands):

Fiscal 2022						$	12,887
Fiscal 2023						11,780
Fiscal 2024						10,585
Fiscal 2025						7,809
Fiscal 2026						6,867
Thereafter						21,576
Total operating lease payments						71,504
Less imputed interest						(8,764)
Total operating lease liabilities						$	62,740

Note 12. Stockholders’ Equity

Common Stock

In connection with our initial public offering in October 2013 (IPO), we amended our certificate of incorporation to provide for Class A common stock, Class B common stock, and preferred stock. Immediately prior to the consummation of the IPO, all outstanding shares of convertible preferred stock and common stock were converted into shares of Class B common stock. As a result, following the IPO, we have two classes of authorized common stock: Class A common stock and Class B common stock.

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As of January 31, 2021, we had 137,062,817 shares of Class A common stock and 14,993,991 shares of Class B common stock outstanding.

As of January 31, 2020, we had 133,892,725 shares of Class A common stock and 15,202,858 shares of Class B common stock outstanding.

Voting Rights

The holders of our Class B common stock are entitled to ten votes per share, and holders of our Class A common stock are entitled to one vote per share. The holders of our Class A common stock and Class B common stock vote together as a single class, unless otherwise required by our restated certificate of incorporation or by law. Delaware law could require either holders of our Class A common stock or our Class B common stock to vote separately as a single class in the following circumstances:

• if we were to seek to amend our restated certificate of incorporation to increase the authorized number of shares of a class of stock, or to increase or decrease the par value of a class of stock, then that class would be required to vote separately to approve the proposed amendment; and

• if we were to seek to amend our restated certificate of incorporation in a manner that alters or changes the powers, preferences, or special rights of a class of stock in a manner that affected its holders adversely, then that class would be required to vote separately to approve the proposed amendment.

Our restated certificate of incorporation requires the approval of a majority of our outstanding Class B common stock voting as a separate class for any transaction that would result in a change in control of our company.

Dividend Rights

Holders of outstanding shares of our common stock are entitled to receive dividends out of funds legally available if our board of directors, in its discretion, determines to issue dividends and only then at the times and in the amounts that our board of directors may determine. To date, no dividends have been declared or paid by us.

No Preemptive or Similar Rights

Our common stock is not entitled to preemptive rights and is not subject to conversion, redemption, or sinking fund provisions.

Right to Receive Liquidation Distributions

Upon our dissolution, liquidation, or winding-up, the assets legally available for distribution to our stockholders are distributable ratably among the holders of our common stock, subject to prior satisfaction of all outstanding debt and liabilities and the preferential rights and payment of liquidation preferences, if any, on any outstanding shares of preferred stock.

Conversion Rights

Each outstanding share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value, which occurs following the closing of our IPO, except for certain permitted transfers described in our restated certificate of incorporation, including transfers to any “permitted transferee” as defined in our restated certificate of incorporation, which includes, among others, transfers:

• to trusts, corporations, limited liability companies, partnerships, foundations or similar entities established by a Class B stockholder, provided that:

• such transfer is to entities established by a Class B stockholder where the Class B stockholder retains the exclusive right to vote and direct the disposition of the shares of Class B common stock; or

• such transfer does not involve payment of cash, securities, property, or other consideration to the Class B stockholder.

76			Veeva Systems Inc. | Form 10-K

Once converted into Class A common stock, a share of Class B common stock may not be reissued.

All the outstanding shares of Class A and Class B common stock will convert automatically into shares of a single class of common stock upon the earliest to occur of the following: (i) upon 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. Once converted into a single class of common stock, the Class A and Class B common stock may not be reissued.

Employee Equity Plans

Beginning in the fiscal quarter ended April 30, 2019, we implemented a new equity compensation program applicable to the vast majority of our employees but not applicable to our Chief Executive Officer (CEO). Prior to the adoption of the new equity compensation program, at the time of hire, our employees received a grant of RSUs that vested quarterly over 4 years and received additional equity from time to time thereafter. Under the new equity compensation program, the vast majority of our employees are granted both RSUs, which typically vest over a one-year period, and stock options, which typically vest over a four-year period.

2007 Stock Plan

Our board of directors adopted our 2007 Stock Plan (2007 Plan) in February 2007, and our stockholders approved it in February 2007. No further awards have been made under our 2007 Plan since the adoption of the 2012 Equity Incentive Plan. However, awards outstanding under our 2007 Plan will continue to be governed by their existing terms.

2012 Equity Incentive Plan

Our board of directors adopted our 2012 Equity Incentive Plan (2012 EIP) in November 2012, and our stockholders approved it in December 2012. An amendment and restatement of the 2012 EIP was approved by our board of directors in March 2013, and our stockholders approved it in March 2013. The 2012 EIP became effective on adoption and replaced our 2007 Plan. No further awards have been made under our 2012 EIP since the adoption of the 2013 Equity Incentive Plan. However, awards outstanding under the 2012 EIP will continue to be governed by their existing terms.

2013 Equity Incentive Plan

Our board of directors adopted our 2013 Equity Incentive Plan (2013 EIP) in August 2013, and our stockholders approved it in September 2013. The 2013 EIP became effective immediately on adoption although no awards were made under it until the date of our IPO on October 15, 2013, at which time our 2013 EIP replaced our 2012 EIP.

As of January 31, 2021, the number of shares of our Class A common stock available for issuance under the 2013 EIP was 33,692,818 plus any shares of our Class B common stock subject to awards under the 2012 EIP and the 2007 Plan that expire or lapse unexercised or, with respect to shares issued pursuant to such awards, are forfeited or repurchased by us after the date of our IPO on October 15, 2013. The number of shares available for issuance under the 2013 EIP automatically increases on the first business day of each of our fiscal years, commencing in 2014, by a number equal to the least of (a) 13.75 million shares, (b) 5% of the shares of all classes of our common stock outstanding on the last business day of the prior fiscal year, or (c) the number of shares determined by our board of directors. During our fiscal year ended January 31, 2021, our board of directors determined to add 6,709,301 shares of common stock to the 2013 EIP.

2013 Employee Stock Purchase Plan

Our Employee Stock Purchase Plan (ESPP) was adopted by our board of directors in August 2013 and our stockholders approved it in September 2013. The ESPP became effective as of our IPO registration statement on Form S-1, on October 15, 2013. Our ESPP is intended to qualify under Section 423 of the Internal Revenue Code of 1986, as amended (Code). The ESPP was approved with a reserve of 4 million shares of Class A common stock for future issuance under various terms provided for in the ESPP. As of January 31, 2021, the number of shares available for issuance under our ESPP was 4,897,856. The number of shares available for issuance under the ESPP automatically increases on the first business day of each of our fiscal years, commencing in 2014, by a number equal to the least of (a) 2.2 million shares, (b) 1% of the shares of all classes of our common stock outstanding on the last business day of the prior fiscal year or (c) the number of shares determined by our board of

Veeva Systems Inc. | Form 10-K			77

directors. During our fiscal year ended January 31, 2021, our board of directors determined no additional shares were to be made available for issuance under the ESPP.

During active offering periods, our ESPP permits eligible employees to acquire shares of our common stock at 85% of the lower of the fair market value of our Class A common stock on the first day of the applicable offering period or the fair market value of our Class A common stock on the purchase date. Participants may purchase shares of common stock through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The initial offering period for our ESPP commenced on the date of our initial public offering and ended on June 15, 2014. We have not had any open offering periods subsequent to the initial offering period.

Stock Option Activity

The 2007 Stock Plan and the 2012 EIP provided, and the 2013 EIP provides, for the issuance of incentive and nonstatutory options to employees, consultants and non-employee directors. Options issued under and outside of the 2007 Plan generally are exercisable for periods not to exceed 10 years and generally vest over four to five years. Options issued under the 2012 EIP and 2013 EIP generally are exercisable for periods not to exceed 10 years and generally vest over four years, with certain options vesting over five to nine years. A summary of stock option activity for the fiscal year ended January 31, 2021 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, 2020			13,448,026						$	40.64					5.4						$	1,427
Options granted			1,427,362						181.18
Options exercised			(1,839,723)						18.92
Options forfeited/cancelled			(274,376)						123.50
Options outstanding at January 31, 2021			12,761,289						$	57.48					5.0						$	2,794
Options vested and exercisable at January 31, 2021			6,817,037						$	17.50					2.9						$	1,765
Options vested and exercisable at January 31, 2021 and expected to vest thereafter			12,761,289						$	57.48					5.0						$	2,794

The options granted during the fiscal year ended January 31, 2021 were predominantly made in connection with our annual performance review cycle. The weighted average grant-date fair value of options granted was $71.86, $60.05, and $35.43 for the fiscal years ended January 31, 2021, 2020, and 2019, respectively.

As of January 31, 2021, there was $215 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 3.2 years.

As of January 31, 2021, we had authorized and unissued shares of common stock sufficient to satisfy exercises of stock options.

Our closing stock price as reported on the New York Stock Exchange as of January 29, 2021, the last trading day of fiscal year 2021 was $276.44. The total intrinsic value of options exercised was approximately $376 million for the fiscal year ended January 31, 2021.

78			Veeva Systems Inc. | Form 10-K

Restricted Stock Units

The 2013 EIP provides for the issuance of RSUs to employees. RSUs issued under the 2013 EIP generally vest over one to five years. A summary of RSU activity for the fiscal year ended January 31, 2021 is as follows:

			Unreleased restricted stock units						Weighted average grant date fair value
Balance at January 31, 2020			1,818,622						$	95.23
RSUs granted			455,000						185.06
RSUs vested			(1,121,502)						105.24
RSUs forfeited / cancelled			(119,905)						111.50
Balance at January 31, 2021			1,032,215						121.98

As of January 31, 2021, there was a total of $109 million in unrecognized compensation cost related to unvested RSUs. This cost is expected to be recognized over a weighted-average period of approximately 2.4 years. The total intrinsic value of RSUs vested was $261 million for the fiscal year ended January 31, 2021.

Stock-Based Compensation

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

									Fiscal year ended January 31,
															2021												2020												2019
Volatility																					39		%	-			42%						39		%	-			41%						41%
Expected term (in years)															6.25			-			7.25						5.64			-			6.61						6.25			-			6.35
Risk-free interest rate																											0.33		%	-			1.43%						1.39		%	-			2.52%						2.57		%	-			2.74%
Dividend yield															0%												0%												0%

Note 13. Other Income

Other income, net, consisted of the following (in thousands):

									Fiscal year ended January 31,
															2021						2020						2019
Foreign currency gain (loss)															$	2,275					$	(708)					$	(2,103)
(Amortization) accretion on investments															(3,082)						3,001						2,492
Interest income, net															15,859						25,185						15,388
Miscellaneous income															1,147						—						—
Other income, net															$	16,199					$	27,478					$	15,777

Note 14. 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.

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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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):

									Fiscal year ended January 31,
												2021												2020												2019
																								Class A						Class B						Class A						Class B						Class A						Class B
Basic
Numerator
Net income, basic																											$	341,866					$	38,132					$	266,104					$	35,014					$	194,607					$	35,225
Denominator
Weighted average shares used in computing net income per share, basic																											135,547						15,119						130,610						17,186						122,137						22,107
Net income per share, basic																											$	2.52					$	2.52					$	2.04					$	2.04					$	1.59					$	1.59
Diluted
Numerator
Net income, basic																											$	341,866					$	38,132					$	266,104					$	35,014					$	194,607					$	35,225
Reallocation as a result of conversion of Class B to Class A common stock:
Net income, basic																											38,132						—						35,014						—						35,225						—
Reallocation of net income to Class B common stock																											—						21,409						—						17,652						—						14,800
Net income, diluted																											$	379,998					$	59,541					$	301,118					$	52,666					$	229,832					$	50,025
Denominator
Number of shares used for basic net income per share computation																											135,547						15,119						130,610						17,186						122,137						22,107
Conversion of Class B to Class A common stock																											15,119						—						17,186						—						22,107						—
Effect of potentially dilutive common shares																											10,066						10,066						10,500						10,500						11,873						11,873
Weighted average shares used in computing net income per share, diluted																											160,732						25,185						158,296						27,686						156,117						33,980
Net income per share, diluted																											$	2.36					$	2.36					$	1.90					$	1.90					$	1.47					$	1.47

Potential common share equivalents excluded where the inclusion would be anti-dilutive are as follows:

									Fiscal year ended January 31,
												2021						2020						2019
Options and awards to purchase shares not included in the computation of diluted net income per share because their inclusion would be anti-dilutive															1,045,222						1,461,255						3,054,322

Note 15. Commitments and Contingencies

Litigation

IQVIA Litigation Matters

Veeva OpenData and Veeva 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)) (OpenData and Network Action). In the complaint, IQVIA alleges that we have 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 in the OpenData and Network Action. Our counterclaims allege that IQVIA has abused monopoly power as the dominant provider of data products for life sciences companies 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 difficulty for customers attempting to switch from IQVIA 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 May 3, 2017, in lieu of filing an answer, IQVIA filed a motion to dismiss our counterclaims. On October 3, 2018, the court denied IQVIA’s motion to dismiss and allowed our antitrust claims to proceed. In addition, on December 3, 2018, we filed an amended answer and counterclaims. IQVIA filed its answer and affirmative defenses on December 21, 2018.

On February 18, 2020, IQVIA filed a motion for sanctions against Veeva, seeking default judgment and dismissal and, in the alternative, a negative inference at trial. Veeva responded to the motion and on October 29, 2020, a hearing was held before the Special Master appointed to assist the court with discovery and pretrial disputes. No ruling has been issued.

Discovery is currently in process.

While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, and we are unable to make a meaningful estimate of the amount or range of gain or loss, if any, that could result from the OpenData and Network Action, we believe that IQVIA’s claims lack merit and that our counterclaims warrant injunctive relief and monetary damages for Veeva.

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.

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, and stayed both actions pending conclusion of the OpenData and Network Action.

While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, we believe that our claims warrant injunctive and declaratory relief and monetary damages for Veeva and against IQVIA.

Fee Arrangements Related to the IQVIA Litigation Matters. We have entered into a partial contingency fee arrangements with certain law firms representing us in the IQVIA litigations. Pursuant to those arrangements, such

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law firms are entitled to an agreed portion of any damages we recover from IQVIA (Contingency Fees) or may be entitled to payment of additional fees from us based on the achievement of certain outcomes (Success Fees). While it is reasonably possible that we may incur such Success Fees, we are unable to make an estimate of any such liability and have not accrued any liability related to Success Fees at this time.

Medidata Litigation Matter

On January 26, 2017, Medidata Solutions, Inc. filed a complaint in the U.S. District Court for the Southern District of New York (Medidata Solutions, Inc. v. Veeva Systems Inc. et al. (No. 1:17-cv-00589)) against us and five individual Veeva employees who previously worked for Medidata (Individual Employees). The complaint alleged that we induced and conspired with the Individual Employees to breach their employment agreements, including non-compete and confidentiality provisions, and to misappropriate Medidata’s confidential and trade secret information. The complaint sought declaratory and injunctive relief, unspecified monetary damages, and attorneys’ fees. Medidata has since amended its complaint twice, asserting the same claims with additional factual allegations, and has voluntarily dismissed the Individual Defendants without prejudice.

Discovery is now completed. On April 24, 2020, Medidata filed a motion for partial summary judgment on its claims for trade secret misappropriation as well as several of Veeva’s affirmative defenses. On May 15, 2020, we filed a motion for summary judgment on all of Medidata’s claims. On February 9, 2021, the court issued it ruling granting summary judgment in favor of Veeva as to certain of Medidata's claims and in favor of Medidata as to certain of Veeva's affirmative defenses. A trial date has been set for September 20, 2021. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, and we are unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome, we believe that Medidata’s claims lack merit.

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.

Value-Added Reseller Agreement

We have a value-added reseller agreement with salesforce.com, inc. for our use of the Salesforce Platform in combination with our developed technology to deliver certain of our multichannel CRM applications, including hosting infrastructure and data center operations provided by salesforce.com. The agreement, as amended, requires that we meet minimum order commitments of $500 million over the term of the agreement, which ends on September 1, 2025, including “true-up” payments if the orders we place with salesforce.com have not equaled or exceeded the following aggregate amounts within the timeframes indicated: (i) $250 million for the period from March 1, 2014 to September 1, 2020 and (ii) the full amount of $500 million by September 1, 2025. We have met our first minimum order requirement commitment of $250 million, and as of January 31, 2021, we remained obligated to pay fees of at least $57 million prior to September 1, 2025 in connection with this agreement.

82			Veeva Systems Inc. | Form 10-K

Note 16. Revenues by Product

Our industry cloud solutions are grouped into two key product areas—Veeva Commercial Cloud and Veeva Vault. Veeva Commercial Cloud is a suite of software and data and analytics solutions built specifically for life sciences companies to more efficiently and effectively commercialize their products. Veeva Vault is a unified suite of cloud-based, enterprise content and data management applications.

Total revenues consist of the following (in thousands):

									Fiscal year ended January 31,
															2021						2020						2019
Subscription services
Veeva Commercial Cloud															$	599,234					$	468,615					$	395,039
Veeva Vault															580,252						427,679						299,428
Total subscription services															1,179,486						896,294						694,467
Professional services
Veeva Commercial Cloud															113,498						76,347						62,557
Veeva Vault															172,085						131,440						105,186
Total professional services															285,583						207,787						167,743
Total revenues															$	1,465,069					$	1,104,081					$	862,210

Note 17. 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 Veeva Commercial Cloud and primarily by the estimated location of usage in each geographic area for Veeva Vault. We measure professional services revenue primarily by the location of the resources performing the professional services.

Total revenues by geographic area were as follows for the periods shown below (in thousands):

									Fiscal year ended January 31,
															2021						2020						2019
North America															$	838,192					$	607,704					$	480,713
Europe															400,790						310,215						228,784
Asia Pacific															183,848						151,052						124,431
Middle East, Africa, and Latin America															42,239						35,110						28,282
Total revenues															$	1,465,069					$	1,104,081					$	862,210

Long-lived assets by geographic area are as follows as of the periods shown below (in thousands):

			January 31,
			2021						2020
North America			$	46,285					$	51,334
Europe			5,525						1,772
Asia Pacific			1,359						1,341
Middle East, Africa, and Latin America			481						305
Total long-lived assets			$	53,650					$	54,752

Note 18. 401(k) Plan

We have a qualified defined contribution plan under Section 401(k) of the Internal Revenue Code covering eligible employees as well as a Registered Retirement Savings Plan (RRSP) for eligible employees in Canada. Under the 401(k) plan, we match up to $2,000 per employee per year. Under the RRSP plan, we also match up to $2,000 per employee per year. For the fiscal years ended January 31, 2021, 2020, and 2019, total expense related to these plans was $6 million, $4 million, and $3 million, respectively.

Veeva Systems Inc. | Form 10-K			83

Note 19. Related-Party Transaction

In September 2016, we entered into an agreement with Zoom Video Communications, Inc. (Zoom) to embed two of their products into our multichannel CRM applications. Pursuant to this agreement, we will pay Zoom a fixed annual fee that is not material to us. We have also entered into a contract with Zoom pursuant to which Zoom provides conference call, video conference, and web conference capabilities for our internal use. Pursuant to this agreement, we pay Zoom a fee based on usage that has not been material in the past and that we do not expect to be material in the future. Our chief executive officer is on the board of directors of Zoom. Also, another member of our board of directors is the founder and a general partner of Emergence Capital Partners, one of Zoom's investors.

Note 20. Selected Quarterly Financial Data (Unaudited)

Selected summarized quarterly financial information for fiscal years ended January 31, 2021 and 2020 is as follows (in thousands, except per share data):

									Three months ended
																								January 31,						October 31,						July 31,						April 30,						January 31,						October 31,						July 31,						April 30,
																											2021						2020						2020						2020						2020						2019						2019						2019
Consolidated Statements of Income Data:
Revenues																											$	396,761					$	377,519					$	353,683					$	337,106					$	311,508					$	280,921					$	266,900					$	244,752
Gross profit																											282,914						274,522						256,479						242,226						217,189						207,592						196,682						179,249
Operating income																											98,843						101,305						90,081						87,565						60,394						80,800						73,856						71,169
Net income																											102,918						96,959						93,551						86,570						66,182						82,245						79,242						73,449
Net income per share:
Basic																											$	0.68					$	0.64					$	0.62					$	0.58					$	0.44					$	0.56					$	0.54					$	0.50
Diluted																											$	0.64					$	0.60					$	0.58					$	0.54					$	0.42					$	0.52					$	0.50					$	0.47