Item 1. FINANCIAL STATEMENTS.

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Item 1. FINANCIAL STATEMENTS.

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)


	October 31, 2024		January 31, 2024

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

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

See Notes to Condensed Consolidated Financial Statements.


4			Veeva Systems Inc. \| Form 10-Q

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)


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


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


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

See Notes to Condensed Consolidated Financial Statements.


Veeva Systems Inc. \| Form 10-Q			5

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


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


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

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


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


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

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

See Notes to Condensed Consolidated Financial Statements.


6			Veeva Systems Inc. \| Form 10-Q

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine months ended October 31,
		2024			2023

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

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

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

See Notes to Condensed Consolidated Financial Statements.


Veeva Systems Inc. \| Form 10-Q			7

VEEVA SYSTEMS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Business and Significant Accounting Policies

Description of Business

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

Principles of Consolidation and Basis of Presentation

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

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

New Accounting Pronouncements Issued and Not Yet Adopted

Improvements to Reportable Segment Disclosures

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

Improvements to Income Tax Disclosures

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


8			Veeva Systems Inc. \| Form 10-Q

Disaggregation of Income Statement Expenses

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

Note 2. Short-Term Investments

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


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

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


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

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


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

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


Veeva Systems Inc. \| Form 10-Q			9

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


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

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

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


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

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

Note 3. Deferred Costs

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

Note 4. Property and Equipment, Net

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


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


10			Veeva Systems Inc. \| Form 10-Q

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

Note 5. Goodwill and Intangible Assets

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

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


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

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


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

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

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


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


Veeva Systems Inc. \| Form 10-Q			11

Note 6. Accrued Expenses

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


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

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

Note 7. Fair Value Measurements

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

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

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

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

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

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


12			Veeva Systems Inc. \| Form 10-Q

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


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

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



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

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


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

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

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


Veeva Systems Inc. \| Form 10-Q			13

Balance Sheet Hedges

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

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


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

Note 8. Income Taxes

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

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

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

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

Transaction Price Allocated to the Remaining Performance Obligations

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

Unbilled Accounts Receivable

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

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

Note 10. Leases

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


14			Veeva Systems Inc. \| Form 10-Q

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

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


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

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


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

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


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

Note 11. Stockholders’ Equity

Common Stock

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

Stock Option Activity

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


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

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


Veeva Systems Inc. \| Form 10-Q			15

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

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

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

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

Stock Option Valuation Assumptions

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


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

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


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

Restricted Stock Units

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


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

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


16			Veeva Systems Inc. \| Form 10-Q

Note 12. Net Income per Share

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

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

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

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


	Three months ended October 31,							Nine months ended October 31,
2024			2023					2024			2023
Common				Class A			Class B			Common			Class A			Class B
Basic
Numerator
Net income, basic	$	185,808			$	124,569		$	10,589		$	518,513		$	345,597		$	32,710
Denominator
Weighted average shares used in computing net income per share, basic	161,987				148,172			12,596			161,707			146,480			13,864
Net income per share, basic	$	1.15			$	0.84		$	0.84		$	3.21		$	2.36		$	2.36
Diluted
Numerator
Net income, basic	$	185,808			$	124,569		$	10,589		$	518,513		$	345,597		$	32,710
Reallocation as a result of conversion of Class B to Class A common stock:
Net income, basic	—				10,589			—			—			32,710			—
Reallocation of net income to Class B common stock	—				—			2,277			—			—			5,901
Net income, diluted	$	185,808			$	135,158		$	12,866		$	518,513		$	378,307		$	38,611
Denominator
Number of shares used for basic net income per share computation	161,987				148,172			12,596			161,707			146,480			13,864
Conversion of Class B to Class A common stock	—				12,596			—			—			13,864			—
Effect of potentially dilutive common shares	2,992				2,993			2,993			3,131			2,785			2,785
Weighted average shares used in computing net income per share, diluted	164,979				163,761			15,589			164,838			163,129			16,649
Net income per share, diluted	$	1.13			$	0.83		$	0.83		$	3.15		$	2.32		$	2.32

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


	Three months ended October 31,				Nine months ended October 31,
2024		2023		2024		2023
Options and RSUs	10,234		6,340		8,621		6,616


Veeva Systems Inc. \| Form 10-Q			17

Note 13. Commitments and Contingencies

Litigation

IQVIA Litigation Matters

Veeva OpenData/Network Action.

On January 10, 2017, IQVIA Inc. (formerly Quintiles IMS Incorporated) and IMS Software Services, Ltd. (collectively, “IQVIA”) filed a complaint against us in the U.S. District Court for the District of New Jersey (IQVIA Inc. v. Veeva Systems Inc. (No. 2:17-cv-00177)). In the complaint, IQVIA alleges that we used unauthorized access to proprietary IQVIA data to improve our software and data products and that our software is designed to steal IQVIA trade secrets. IQVIA further alleges that we have intentionally gained unauthorized access to IQVIA proprietary information to gain an unfair advantage in marketing our products and that we have made false statements concerning IQVIA’s conduct and our data security capabilities. IQVIA asserts claims under both federal and state misappropriation of trade secret laws, federal false advertising law, and common law claims for unjust enrichment, tortious interference, and unfair trade practices. The complaint seeks declaratory and injunctive relief and unspecified monetary damages.

On March 13, 2017, we filed our answer denying IQVIA's claims and filed counterclaims. Our counterclaims allege that IQVIA, as the dominant provider of data for life sciences companies, has abused monopoly power to exclude Veeva OpenData and Veeva Network from their respective markets. The counterclaims allege that IQVIA has engaged in various tactics to prevent customers from using our applications and has deliberately raised costs and increased the difficulty of attempting to switch from IQVIA data to our data products. As amended, our counterclaims assert federal and state antitrust claims, as well as claims under California’s Unfair Practices Act and common law claims for intentional interference with contractual relations, intentional interference with prospective economic advantage, and negligent misrepresentation. The counterclaims seek injunctive relief, monetary damages exceeding $200 million, and attorneys’ fees. On October 3, 2018, the court denied IQVIA’s motion to dismiss our antitrust claims.

On February 18, 2020, IQVIA filed a motion for sanctions against Veeva, seeking default judgment and dismissal and, in the alternative, an adverse inference at trial related to discovery disputes. On May 7, 2021, the special master appointed to oversee litigation discovery ruled against IQVIA’s request for default judgment and dismissal and ruled in IQVIA’s favor with respect to certain other matters, including recommending to the trial judge that a permissive adverse inference instruction be issued to the jury with respect to certain documents that were not preserved by Veeva. Should the trial judge accept the recommendation, the jury would be permitted, but not required, to infer that certain evidence not preserved by Veeva would have been unfavorable to Veeva, if the jury first concludes that Veeva controlled the evidence, that the evidence was relevant, and that Veeva should have preserved the evidence. The jury is also likely to be instructed that it may also consider whether the non-preserved evidence was duplicative of other evidence produced by Veeva and whether Veeva’s conduct was reasonable in light of all circumstances. Veeva was also ordered to pay IQVIA’s fees and expenses incurred in connection with portions of its sanctions motion. On June 4, 2021, we appealed the special master’s ruling and IQVIA’s fee award to the federal district court judge.

Veeva Nitro Action.

On July 17, 2019, IQVIA filed a lawsuit in the U.S. District Court for the District of New Jersey (IQVIA Inc. v. Veeva Systems Inc. (No. 2:19-cv-15517)) (IQVIA Declaratory Action) seeking a declaratory judgment that IQVIA is not liable to Veeva for disallowing use of IQVIA’s data products in Veeva Nitro or any later-introduced Veeva software products. The IQVIA Declaratory Action does not seek any monetary relief.

On July 18, 2019, we filed a lawsuit against IQVIA in the U.S. District Court for the Northern District of California (Veeva Systems Inc. v. IQVIA Inc. (No. 3:19-cv-04137)) (Veeva Nitro Action), alleging that IQVIA engaged in anticompetitive conduct as to Veeva Nitro. Our complaint asserts federal and state antitrust claims, as well as claims under California’s Unfair Competition Law and common law claims for intentional interference with contractual relations and intentional interference with prospective economic advantage. The complaint seeks injunctive relief and monetary damages. IQVIA filed its answer and affirmative defenses on September 5, 2019.

On September 26, 2019, the Northern District of California transferred the Veeva Nitro Action to the District of New Jersey (Veeva Systems Inc. v. IQVIA Inc. (No. 2:19-cv-18558)). On March 24, 2020, we amended our complaint in the Veeva Nitro Action to include allegations of IQVIA’s anticompetitive conduct as to additional Veeva software applications, such as Veeva Andi, Veeva Align, and Veeva Vault MedComms; additional examples of IQVIA’s


18			Veeva Systems Inc. \| Form 10-Q

monopolistic behavior against Veeva Nitro; IQVIA’s unlawful access of Veeva’s proprietary software products; and a request for declaratory relief. IQVIA answered the amended complaint on May 22, 2020. On August 21, 2020, the District of New Jersey consolidated the Veeva Nitro Action and IQVIA Declaratory Action.

Fact discovery in both the Veeva OpenData/Network Action and the Veeva Nitro Action is largely complete and expert discovery in both cases was completed in October 2023.

The federal district court presiding over all of the IQVIA Litigation Matters has bifurcated the claims for trial such that IQVIA's trade secret claims will go to trial first. In September 2024, the parties filed cross motions for summary judgment on the trade secret claims and a hearing on the motions has been set for January 9, 2024. At this point, we do not expect trial to begin on February 10, 2025, as previously scheduled.

While it is not possible at this time to predict with any degree of certainty the ultimate outcome of these lawsuits, and we are unable to make a meaningful estimate of the amount or range of gain or loss, if any, that could result from them, we believe that we have substantial defenses against IQVIA’s claims, which we intend to vigorously contest, and that our counterclaims warrant injunctive relief and monetary damages for Veeva.

Fee Arrangements Related to the IQVIA Litigation Matters. We have entered into partial contingency fee arrangements with certain law firms representing us in the IQVIA litigations. Pursuant to those arrangements, such law firms are entitled to an agreed portion of any damages we recover from IQVIA or may be entitled to payment of success fees from us based on the achievement of certain outcomes. We are unable to make an estimate of any liability we may have in connection with this arrangement and accordingly have not accrued any related liability at this time.

Other Litigation Matters

From time to time, we may be involved in other legal proceedings and subject to claims incident to the ordinary course of business. Although the results of such legal proceedings and claims cannot be predicted with certainty, we believe we are not currently a party to any other legal proceedings, the outcome of which, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows, or financial position. Regardless of the outcome, such proceedings can have an adverse impact on us because of defense and settlement costs, diversion of resources, and other factors, and there can be no assurances that favorable outcomes will be obtained.

Note 14. Revenues by Product

We group our revenues into two product areas: Commercial Solutions and R&D Solutions. Commercial Solutions revenues consist of revenues from our Veeva Commercial Cloud, Veeva Data Cloud, and Veeva Claims solutions. R&D Solutions consist of revenues from our Veeva Development Cloud, Veeva RegulatoryOne, and Veeva QualityOne solutions.

Total revenues consist of the following (in thousands):


	Three months ended October 31,				Nine months ended October 31,
	2024		2023		2024		2023
Subscription services
Commercial Solutions	$	278,377	$	251,167	$	811,503	$	733,921
R&D Solutions	302,473		243,745		864,579		646,174
Total subscription services	580,850		494,912		1,676,082		1,380,095
Professional services
Commercial Solutions	45,855		47,899		139,695		140,082
R&D Solutions	72,502		73,694		209,956		212,878
Total professional services	118,357		121,593		349,651		352,960
Total revenues	$	699,207	$	616,505	$	2,025,733	$	1,733,055

Note 15. Information about Geographic Areas


Veeva Systems Inc. \| Form 10-Q			19

We track and allocate revenues by principal geographic area rather than by individual country, which makes it impractical to disclose revenues for the United States or other specific foreign countries. We measure subscription services revenue primarily by the estimated location of the end users in each geographic area for our Commercial Solutions and primarily by the estimated location of usage in each geographic area for our R&D Solutions. We measure professional services revenue primarily by the location of the resources performing the professional services.

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


	Three months ended October 31,				Nine months ended October 31,
	2024		2023		2024		2023
Revenues by geography
North America	$	414,474	$	362,381	$	1,192,044	$	1,022,691
Europe	198,667		172,473		586,897		479,423
Asia Pacific	68,655		65,180		195,974		184,720
Middle East, Africa, and Latin America	17,411		16,471		50,818		46,221
Total revenues	$	699,207	$	616,505	$	2,025,733	$	1,733,055

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


	October 31, 2024		January 31, 2024
Long-lived assets by geography
North America	$	47,736	$	49,725
Europe	5,933		6,885
Asia Pacific	1,202		751
Middle East, Africa, and Latin America	824		1,171
Total long-lived assets	$	55,695	$	58,532


20			Veeva Systems Inc. \| Form 10-Q

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