UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended April 30, ~~2021~~2022


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

For the transition period from to .

Commission File Number: 001-36121

Veeva Systems Inc.

(Exact name of registrant as specified in its charter)


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

4280 Hacienda Drive

Pleasanton, California, 94588

(Address of principal executive offices)

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

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

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

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock,
par value $0.00001 per share

VEEV

The New York Stock Exchange

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

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

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


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

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

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

As of ~~May 31, 2021,~~June 1, 2022, there were ~~138,152,712~~140,081,514 shares of the Registrant’s Class A common stock outstanding and ~~14,766,556~~14,765,491 shares of the Registrant’s Class B common stock outstanding.

VEEVA SYSTEMS INC.

FORM 10-Q

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION		4
Item 1.	Financial Statements.	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Comprehensive Income	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
	Note 1. Summary of Business and Significant Accounting Policies	8
	Note 2. Short-Term Investments	9
	Note 3. Deferred Costs	10
	Note 4. Property and Equipment, Net	10
	Note 5. Goodwill and Intangible Assets	11
	Note 6. Accrued Expenses	12
	Note 7. Fair Value Measurements	12
	Note 8. Income Taxes	14
	Note 9. Deferred Revenue, Performance Obligations, and Unbilled Accounts Receivable	14
	Note 10. Leases	1415
	Note 11. Stockholders’ Equity	1516
	Note 12. Net Income per Share	1617
	Note 13. Commitments and Contingencies	1817
	Note 14. Revenues by Product	20
	Note 15. Information about Geographic Areas	20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2221
	Overview	2221
	Key Factors Affecting Our Performance	2423
	Components of Results of Operations	2423
	Results of Operations	2726
	Operating Expenses and Operating Margin	28
	Non-GAAP Financial Measures	30
	Liquidity and Capital Resources	32
	~~Commitments~~	34
	~~Off-Balance Sheet Arrangements~~	34
	Critical Accounting Policies and Estimates	3433
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3534
Item 4.	Controls and Procedures.	3635
PART II. OTHER INFORMATION		3736
Item 1.	Legal Proceedings	3736
Item 1A	Risk Factors	3837
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibits	62
SIGNATURES		63


2			Veeva Systems Inc. \| Form 10-Q

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

Forward-looking statements are based on our current views and expectations and involve known and unknown risks, uncertainties and other factors—including those described in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this report—that may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Forward looking statements are based on our current views and expectations and are subject to various risks and uncertainties, including those related to the impact of COVID-19 on our business, the life sciences industry, and global economic conditions. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

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

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


Veeva Systems Inc. \| Form 10-Q			3

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

(Unaudited)


		April 30, 2021		January 31, 2021			April 30, 2022		January 31, 2022

Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,184,980	$	730,504	Cash and cash equivalents	$	1,239,998	$	1,138,040
Short-term investments	Short-term investments	965,453		933,122		Short-term investments	1,598,555		1,238,064
Accounts receivable, net of allowance for doubtful accounts of $358 and $193, respectively		262,327		564,387
Accounts receivable, net of allowance for doubtful accounts of $448 and $473, respectively						Accounts receivable, net of allowance for doubtful accounts of $448 and $473, respectively	329,677		631,134
Unbilled accounts receivable	Unbilled accounts receivable	51,367		47,206		Unbilled accounts receivable	61,971		63,266
Prepaid expenses and other current assets	Prepaid expenses and other current assets	30,939		35,607		Prepaid expenses and other current assets	45,094		36,679
Total current assets	Total current assets	2,495,066		2,310,826		Total current assets	3,275,295		3,107,183
Property and equipment, net	Property and equipment, net	52,248		53,650		Property and equipment, net	53,816		54,495
Deferred costs, net	Deferred costs, net	40,007		42,072		Deferred costs, net	30,192		33,106
Lease right-of-use assets	Lease right-of-use assets	53,776		56,917		Lease right-of-use assets	48,887		49,640
Goodwill	Goodwill	436,029		436,029		Goodwill	439,877		439,877
Intangible assets, net	Intangible assets, net	110,166		114,595		Intangible assets, net	97,194		101,940
Deferred income taxes	Deferred income taxes	13,845		14,100		Deferred income taxes	40,674		5,097
Other long-term assets	Other long-term assets	21,012		17,878		Other long-term assets	25,287		25,127
Total assets	Total assets	$	3,222,149	$	3,046,067	Total assets	$	4,011,222	$	3,816,465
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	18,858	$	23,253	Accounts payable	$	25,404	$	20,348
Accrued compensation and benefits	Accrued compensation and benefits	31,720		30,410		Accrued compensation and benefits	33,214		33,834
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	32,716		30,982		Accrued expenses and other current liabilities	33,931		36,109
Income tax payable	Income tax payable	6,299		2,590		Income tax payable	50,984		7,761
Deferred revenue	Deferred revenue	608,673		616,992		Deferred revenue	723,721		731,746
Lease liabilities	Lease liabilities	11,280		11,725		Lease liabilities	11,606		10,981
Total current liabilities	Total current liabilities	709,546		715,952		Total current liabilities	878,860		840,779
Deferred income taxes	Deferred income taxes	6,488		1,835		Deferred income taxes	1,725		2,216
Lease liabilities, noncurrent	Lease liabilities, noncurrent	48,672		51,393		Lease liabilities, noncurrent	42,462		43,607
Other long-term liabilities	Other long-term liabilities	12,459		10,567		Other long-term liabilities	19,900		18,226
Total liabilities	Total liabilities	777,165		779,747		Total liabilities	942,947		904,828
Commitments and contingencies (note 13)	Commitments and contingencies (note 13)	0		0		Commitments and contingencies (note 13)	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Class A common stock, $0.00001 par value; 800,000,000 shares authorized, 138,022,066 and 137,062,817 issued and outstanding at April 30, 2021 and January 31, 2021, respectively		2		2
Class B common stock, $0.00001 par value; 190,000,000 shares authorized, 14,778,290 and 14,993,991 issued and outstanding at April 30, 2021 and January 31, 2021, respectively		0		0
Class A common stock, $0.00001 par value; 800,000,000 shares authorized, 140,032,529 and 139,432,822 issued and outstanding at April 30, 2022 and January 31, 2022, respectively						Class A common stock, $0.00001 par value; 800,000,000 shares authorized, 140,032,529 and 139,432,822 issued and outstanding at April 30, 2022 and January 31, 2022, respectively	2		2
Class B common stock, $0.00001 par value; 190,000,000 shares authorized, 14,765,431 and 14,763,775 issued and outstanding at April 30, 2022 and January 31, 2022, respectively						Class B common stock, $0.00001 par value; 190,000,000 shares authorized, 14,765,431 and 14,763,775 issued and outstanding at April 30, 2022 and January 31, 2022, respectively	—		—
Additional paid-in capital	Additional paid-in capital	1,032,063		965,670		Additional paid-in capital	1,265,323		1,196,547
Accumulated other comprehensive income (loss)		(2,304)		992
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(24,211)		(11,958)
Retained earnings	Retained earnings	1,415,223		1,299,656		Retained earnings	1,827,161		1,727,046
Total stockholders’ equity	Total stockholders’ equity	2,444,984		2,266,320		Total stockholders’ equity	3,068,275		2,911,637
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	3,222,149	$	3,046,067	Total liabilities and stockholders’ equity	$	4,011,222	$	3,816,465

See Notes to Condensed Consolidated Financial Statements.


4			Veeva Systems Inc. \| Form 10-Q

Table of Contents

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)


		Three months ended April 30,				Three months ended April 30,
		2021		2020				2022		2021

Revenues:	Revenues:						Revenues:
Subscription services	Subscription services	$	341,119	$	270,235		Subscription services	$	402,632	$	341,119
Professional services and other	Professional services and other	92,454		66,871			Professional services and other	102,470		92,454
Total revenues	Total revenues	433,573		337,106			Total revenues	505,102		433,573
Cost of revenues(1):	Cost of revenues(1):						Cost of revenues(1):
Cost of subscription services	Cost of subscription services	51,217		43,212			Cost of subscription services	58,953		51,217
Cost of professional services and other	Cost of professional services and other	64,919		51,668			Cost of professional services and other	80,562		64,919
Total cost of revenues	Total cost of revenues	116,136		94,880			Total cost of revenues	139,515		116,136
Gross profit	Gross profit	317,437		242,226			Gross profit	365,587		317,437
Operating expenses(1):	Operating expenses(1):						Operating expenses(1):
Research and development	Research and development	83,226		62,237			Research and development	113,475		83,226
Sales and marketing	Sales and marketing	64,610		55,755			Sales and marketing	76,115		64,610
General and administrative	General and administrative	41,155		36,669			General and administrative	48,325		41,155
Total operating expenses	Total operating expenses	188,991		154,661			Total operating expenses	237,915		188,991
Operating income	Operating income	128,446		87,565			Operating income	127,672		128,446
Other income, net	Other income, net	4,564		3,414			Other income, net	2,709		4,564
Income before income taxes	Income before income taxes	133,010		90,979			Income before income taxes	130,381		133,010
Provision for income taxes	Provision for income taxes	17,443		4,409			Provision for income taxes	30,266		17,443
Net income	Net income	$	115,567	$	86,570		Net income	$	100,115	$	115,567
Net income per share:	Net income per share:						Net income per share:
Basic	Basic	$	0.76	$	0.58		Basic	$	0.65	$	0.76
Diluted	Diluted	$	0.71	$	0.54		Diluted	$	0.62	$	0.71
Weighted-average shares used to compute net income per share:	Weighted-average shares used to compute net income per share:						Weighted-average shares used to compute net income per share:
Basic	Basic	152,444		149,541			Basic	154,514		152,444
Diluted	Diluted	162,213		159,474			Diluted	161,928		162,213
Other comprehensive income:	Other comprehensive income:						Other comprehensive income:
Net change in unrealized gain (loss) on available-for-sale investments		$	(1,086)	$	1,297
Net change in cumulative foreign currency translation gain (loss)		(2,213)		389
Net change in unrealized loss on available-for-sale investments							Net change in unrealized loss on available-for-sale investments	$	(10,999)	$	(1,086)
Net change in cumulative foreign currency translation loss							Net change in cumulative foreign currency translation loss	(1,254)		(2,213)
Comprehensive income	Comprehensive income	$	112,268	$	88,256		Comprehensive income	$	87,862	$	112,268


(1) Includes stock-based compensation as follows:	(1) Includes stock-based compensation as follows:					(1) Includes stock-based compensation as follows:
Cost of revenues:	Cost of revenues:					Cost of revenues:
Cost of subscription services	Cost of subscription services	$	906	$	1,019	Cost of subscription services	$	1,277	$	906
Cost of professional services and other	Cost of professional services and other	7,422		5,074		Cost of professional services and other	9,990		7,422
Research and development	Research and development	16,837		11,401		Research and development	25,823		16,837
Sales and marketing	Sales and marketing	11,555		8,192		Sales and marketing	16,893		11,555
General and administrative	General and administrative	11,769		11,221		General and administrative	13,151		11,769
Total stock-based compensation	Total stock-based compensation	$	48,489	$	36,907	Total stock-based compensation	$	67,134	$	48,489

See Notes to Condensed Consolidated Financial Statements.


Veeva Systems Inc. \| Form 10-Q			5

Table of Contents

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


		Three months ended April 30, 2021																	Three months ended April 30, 2022
		Class A & B common stock			Additional paid-in capital				Retained earnings		Accumulated other comprehensive income		Total stockholders’ equity											Class A & B common stock								Additional paid-in capital				Retained earnings				Accumulated other comprehensive loss				Total stockholders’ equity
		Shares	Amount																	Shares	Amount	Additional paid-in capital

Balances at January 31, 2021		152,056,808	$	2			$	965,670			$	1,299,656			$	992	$	2,266,320
Balances at beginning of period																								Balances at beginning of period	154,196,597				$	2			$	1,196,547			$	1,727,046			$	(11,958)			$	2,911,637

Issuance of common stock upon exercise of stock options	Issuance of common stock upon exercise of stock options	485,037	—		17,600				—		—		17,600													Issuance of common stock upon exercise of stock options		482,436				—				16,291				—				—			16,291
Issuance of common stock upon vesting of restricted stock units	Issuance of common stock upon vesting of restricted stock units	258,511	—		—				—		—		0													Issuance of common stock upon vesting of restricted stock units		185,800				—				—				—				—			—
Shares withheld related to net share settlement																						Shares withheld related to net share settlement	(66,873)				—				(14,910)				—				—				(14,910)
Stock-based compensation expense	Stock-based compensation expense	—	—		48,793				—		—		48,793													Stock-based compensation expense		—				—				67,395				—				—			67,395
Change in other comprehensive income (loss)		—	—		—				—		(3,296)		(3,296)
Change in other comprehensive loss																						Change in other comprehensive loss	—				—				—				—				(12,253)				(12,253)
Net income	Net income	—	—		—				115,567		—		115,567													Net income		—				—				—				100,115				—			100,115
Balances at April 30, 2021		152,800,356	$	2	$	1,032,063			$	1,415,223	$	(2,304)	$	2,444,984
Balances at end of period																						Balances at end of period	154,797,960				$	2			$	1,265,323			$	1,827,161			$	(24,211)			$	3,068,275


		Three months ended April 30, 2020																	Three months ended April 30, 2021
		Class A & B common stock			Additional paid-in capital				Retained earnings		Accumulated other comprehensive income		Total stockholders’ equity											Class A & B common stock								Additional paid-in capital				Retained earnings				Accumulated other comprehensive income (loss)				Total stockholders’ equity
		Shares	Amount																	Shares	Amount	Additional paid-in capital

Balances at January 31, 2020		149,095,583	$	1			$	745,475			$	919,658			$	460	$	1,665,594
Balances at beginning of period																								Balances at beginning of period	152,056,808				$	2			$	965,670			$	1,299,656			$	992			$	2,266,320
Issuance of common stock upon exercise of stock options	Issuance of common stock upon exercise of stock options	645,515	1		10,278				—		—		10,279													Issuance of common stock upon exercise of stock options		485,037				—				17,600				—				—			17,600
Issuance of common stock upon vesting of restricted stock units	Issuance of common stock upon vesting of restricted stock units	288,949	—		—				—		—		0													Issuance of common stock upon vesting of restricted stock units		258,511				—				—				—				—			—

Stock-based compensation expense	Stock-based compensation expense	—	—		36,907				—		—		36,907													Stock-based compensation expense		—				—				48,793				—				—			48,793
Change in other comprehensive income (loss)		—	—		—				—		1,686		1,686
Change in other comprehensive loss																						Change in other comprehensive loss	—				—				—				—				(3,296)				(3,296)
Net income	Net income	—	—		—				86,570		—		86,570													Net income		—				—				—				115,567				—			115,567
Balances at April 30, 2020		150,030,047	$	2	$	792,660			$	1,006,228	$	2,146	$	1,801,036
Balances at end of period																						Balances at end of period	152,800,356				$	2			$	1,032,063			$	1,415,223			$	(2,304)			$	2,444,984

See Notes to Condensed Consolidated Financial Statements.


6			Veeva Systems Inc. \| Form 10-Q

Table of Contents

VEEVA SYSTEMS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Three months ended April 30,
		2021				2020					Three months ended April 30,
											2022				2021

Cash flows from operating activities	Cash flows from operating activities							Cash flows from operating activities
Net income	Net income	$	115,567	$	86,570			Net income	$	100,115			$	115,567
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:								Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	6,628				7,878			Depreciation and amortization		7,058				6,628
Reduction of operating lease right-of-use assets	Reduction of operating lease right-of-use assets	2,827				2,997			Reduction of operating lease right-of-use assets		2,948				2,827
Accretion (amortization) of discount on short-term investments		1,542				(11)
Amortization of discount on short-term investments									Amortization of discount on short-term investments		1,056				1,542
Stock-based compensation	Stock-based compensation	48,489				36,907			Stock-based compensation		67,134				48,489
Amortization of deferred costs	Amortization of deferred costs	6,355				4,751			Amortization of deferred costs		5,993				6,355
Deferred income taxes	Deferred income taxes	5,242				(1,134)			Deferred income taxes		(32,432)				5,242
Loss on foreign currency from mark-to-market derivative		431				93
(Gain) loss on foreign currency from mark-to-market derivative									(Gain) loss on foreign currency from mark-to-market derivative		(582)				431
Bad debt (recovery) expense	Bad debt (recovery) expense	159				(393)			Bad debt (recovery) expense		(25)				159
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:								Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	301,732				154,160			Accounts receivable		301,482				301,732
Unbilled accounts receivable	Unbilled accounts receivable	(4,161)				(4,452)			Unbilled accounts receivable		1,295				(4,161)
Deferred costs	Deferred costs	(4,290)				(3,342)			Deferred costs		(3,079)				(4,290)
Income taxes payable		3,709				(1,850)
Prepaid expenses and other current and long-term assets	Prepaid expenses and other current and long-term assets	2,737				551			Prepaid expenses and other current and long-term assets		(7,563)				2,737
Accounts payable	Accounts payable	(6,794)				(4,430)			Accounts payable		5,121				(6,794)
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	6,967				2,691			Accrued expenses and other current liabilities		(2,336)				6,967
Income taxes payable									Income taxes payable		43,223				3,709
Deferred revenue	Deferred revenue	(8,176)				1,477			Deferred revenue		(7,471)				(8,176)
Operating lease liabilities	Operating lease liabilities	(2,748)				(2,811)			Operating lease liabilities		(2,031)				(2,748)
Other long-term liabilities	Other long-term liabilities	2,169				2,520			Other long-term liabilities		1,121				2,169
Net cash provided by operating activities	Net cash provided by operating activities	478,385				282,172			Net cash provided by operating activities		481,027				478,385
Cash flows from investing activities	Cash flows from investing activities								Cash flows from investing activities
Purchases of short-term investments	Purchases of short-term investments	(256,938)				(188,818)			Purchases of short-term investments		(572,344)				(256,938)
Maturities and sales of short-term investments	Maturities and sales of short-term investments	221,645				140,342			Maturities and sales of short-term investments		196,190				221,645

Long-term assets	Long-term assets	(2,656)				267			Long-term assets		(2,333)				(2,656)
Net cash used in investing activities	Net cash used in investing activities	(37,949)				(48,209)			Net cash used in investing activities		(378,487)				(37,949)
Cash flows from financing activities	Cash flows from financing activities								Cash flows from financing activities
Changes in lease liabilities - finance leases	Changes in lease liabilities - finance leases	(286)				(248)			Changes in lease liabilities - finance leases		—				(286)
Proceeds from exercise of common stock options	Proceeds from exercise of common stock options	17,091				9,781			Proceeds from exercise of common stock options		16,291				17,091
Taxes paid related to net share settlement of equity awards									Taxes paid related to net share settlement of equity awards		(14,999)				—
Net cash provided by financing activities	Net cash provided by financing activities	16,805				9,533			Net cash provided by financing activities		1,292				16,805
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(2,765)				548			Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(1,874)				(2,765)
Net change in cash, cash equivalents, and restricted cash	Net change in cash, cash equivalents, and restricted cash	454,476				244,044			Net change in cash, cash equivalents, and restricted cash		101,958				454,476
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	731,712				479,797			Cash, cash equivalents, and restricted cash at beginning of period		1,141,225				731,712
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	1,186,188			$	723,841		Cash, cash equivalents, and restricted cash at end of period		$	1,243,183			$	1,186,188

Cash, cash equivalents, and restricted cash at end of period:	Cash, cash equivalents, and restricted cash at end of period:								Cash, cash equivalents, and restricted cash at end of period:
Cash and cash equivalents	Cash and cash equivalents	$	1,184,980			$	720,776		Cash and cash equivalents		$	1,239,998			$	1,184,980
Restricted cash included in other long-term assets	Restricted cash included in other long-term assets	1,208				3,065			Restricted cash included in other long-term assets		3,185				1,208
Total cash, cash equivalents, and restricted cash at end of period	Total cash, cash equivalents, and restricted cash at end of period	$	1,186,188			$	723,841		Total cash, cash equivalents, and restricted cash at end of period		$	1,243,183			$	1,186,188

Supplemental disclosures of other cash flow information:	Supplemental disclosures of other cash flow information:								Supplemental disclosures of other cash flow information:
Cash paid for income taxes, net of refunds	Cash paid for income taxes, net of refunds	$	5,133			$	5,866		Cash paid for income taxes, net of refunds		$	18,189			$	5,133
Excess tax benefits from employee stock plans	Excess tax benefits from employee stock plans	$	17,451			$	19,615		Excess tax benefits from employee stock plans		$	4,907			$	17,451
Non-cash investing activities:	Non-cash investing activities:								Non-cash investing activities:
Changes in accounts payable and accrued expenses related to property and equipment purchases	Changes in accounts payable and accrued expenses related to property and equipment purchases	$	806			$	590		Changes in accounts payable and accrued expenses related to property and equipment purchases		$	(438)			$	806

See Notes to Condensed Consolidated Financial Statements.


Veeva Systems Inc. \| Form 10-Q			7

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VEEVA SYSTEMS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Summary of Business and Significant Accounting Policies

Description of Business

Veeva is the leading provider of industry cloud solutions for the global life sciences industry. 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 offerings span cloud software, data, analytics, professional services, and business consulting and are designed to meet the unique needs of our customers and their most strategic business functions—from research and development (R&D) to commercialization. Our solutions help life sciences companies develop and bring products to market faster and more efficiently, market and sell more effectively, and maintain compliance with government regulations. Our ~~commercial solutions~~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~~Solutions for the clinical, quality, 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 ~~other regulated industries, including, for example,~~the consumer ~~goods, chemicals,~~product and ~~cosmetics.~~chemical industries. Our fiscal year end is January 31.

Principles of Consolidation and Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting and include the accounts of our wholly-owned subsidiaries after elimination of intercompany accounts and transactions. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2021,~~2022, filed on March 30, ~~2021.~~2022. 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, ~~2021~~2022 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, ~~2022~~2023 or any other period.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that affect the condensed consolidated financial statements and the notes thereto. These estimates are based on information available as of the date of the condensed consolidated financial statements. On a regular basis, management evaluates these estimates and assumptions. Items subject to such estimates and assumptions include, but are not limited to:

•the standalone selling price for each distinct performance obligation included in customer contracts with multiple performance obligations;

•the determination of the period of benefit for amortization of deferred costs;

•the realizability of deferred income tax assets and liabilities;

•the fair value of our stock-based awards.

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


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~~New Accounting Pronouncements Adopted in Fiscal 2022~~

~~Income Taxes~~

~~In December 2019, the Financial Accounting Standards Board (FASB) issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes"~~, which simplifies accounting guidance for certain tax matters. We adopted this standard effective February 1, 2021. The adoption of this new standard did not have a material impact on our condensed consolidated financial statements.

Note 2. Short-Term Investments

At April 30, ~~2021,~~2022, short-term investments consisted of the following (in thousands):


		Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value			Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:	Available-for-sale securities:									Available-for-sale securities:
Certificates of deposits	Certificates of deposits	$	22,350	$	18	$	0	$	22,368	Certificates of deposits	$	63,710	$	13	$	(69)	$	63,654
Asset-backed securities	Asset-backed securities	144,412		470		(49)		144,833		Asset-backed securities	239,639		6		(3,465)		236,180
Commercial paper	Commercial paper	59,425		4		(5)		59,424		Commercial paper	151,341		14		(93)		151,262
Corporate notes and bonds	Corporate notes and bonds	535,609		1,743		(209)		537,143		Corporate notes and bonds	802,603		58		(15,100)		787,561
Foreign government bonds	Foreign government bonds	32,092		41		(9)		32,124		Foreign government bonds	24,521		4		(425)		24,100
U.S. agency obligations	U.S. agency obligations	52,761		78		0		52,839		U.S. agency obligations	27,982		10		(622)		27,370
U.S. treasury securities	U.S. treasury securities	116,374		356		(8)		116,722		U.S. treasury securities	312,468		20		(4,060)		308,428
Total available-for-sale securities	Total available-for-sale securities	$	963,023	$	2,710	$	(280)	$	965,453	Total available-for-sale securities	$	1,622,264	$	125	$	(23,834)	$	1,598,555

At January 31, ~~2021,~~2022, short-term investments consisted of the following (in thousands):


		Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value			Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
Available-for-sale securities:	Available-for-sale securities:									Available-for-sale securities:
Certificates of deposits	Certificates of deposits	$	17,350	$	15	$	(1)	$	17,364	Certificates of deposits	$	13,500	$	—	$	(15)	$	13,485
Asset-backed securities	Asset-backed securities	125,833		745		(2)		126,576		Asset-backed securities	191,676		45		(1,432)		190,289
Commercial paper	Commercial paper	57,390		8		(2)		57,396		Commercial paper	29,432		—		(2)		29,430
Corporate notes and bonds	Corporate notes and bonds	428,710		2,360		(23)		431,047		Corporate notes and bonds	669,489		276		(5,856)		663,909
Foreign government bonds	Foreign government bonds	31,855		45		(2)		31,898		Foreign government bonds	24,577		13		(179)		24,411
U.S. agency obligations	U.S. agency obligations	52,756		119		0		52,875		U.S. agency obligations	27,978		12		(254)		27,736
U.S. treasury securities	U.S. treasury securities	215,379		587		0		215,966		U.S. treasury securities	290,513		46		(1,755)		288,804
Total available-for-sale securities	Total available-for-sale securities	$	929,273	$	3,879	$	(30)	$	933,122	Total available-for-sale securities	$	1,247,165	$	392	$	(9,493)	$	1,238,064

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


		April 30, 2021		January 31, 2021			April 30, 2022		January 31, 2022
Due in one year or less	Due in one year or less	$	356,853	$	428,155	Due in one year or less	$	666,232	$	457,948
Due in one to five years		608,600		504,967
Due in greater than one year						Due in greater than one year	932,323		780,116
Total	Total	$	965,453	$	933,122	Total	$	1,598,555	$	1,238,064

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 that 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 April 30, ~~2021~~2022 (in thousands):


		Held for less than 12 months			Held for less than 12 months
		Fair value	Gross unrealized losses		Fair value		Gross unrealized losses

Certificates of deposits				Certificates of deposits	$	33,641	$	(69)
Asset-backed securities	Asset-backed securities	30,844	(49)	Asset-backed securities	227,959		(3,465)
Commercial paper	Commercial paper	33,342	(5)	Commercial paper	112,904		(93)
Corporate notes and bonds	Corporate notes and bonds	174,182	(209)	Corporate notes and bonds	730,194		(15,100)
Foreign government bonds	Foreign government bonds	12,097	(9)	Foreign government bonds	20,516		(425)
U.S. agency obligations				U.S. agency obligations	24,360		(622)
U.S. treasury securities	U.S. treasury securities	7,479	(8)	U.S. treasury securities	270,888		(4,060)

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~~2022 (in thousands):


		Held for less than 12 months					Held for less than 12 months
		Fair value		Gross unrealized losses			Fair value		Gross unrealized losses

Certificates of deposits	Certificates of deposits	$	3,749	$	(2)	Certificates of deposits	$	5,985	$	(15)
Asset-backed securities	Asset-backed securities	3,318		(1)		Asset-backed securities	177,056		(1,432)
Commercial paper	Commercial paper	17,626		(2)		Commercial paper	17,190		(2)
Corporate notes and bonds	Corporate notes and bonds	29,558		(23)		Corporate notes and bonds	571,099		(5,856)
Foreign government bonds	Foreign government bonds	2,679		(2)		Foreign government bonds	19,594		(179)
U.S. agency obligations						U.S. agency obligations	24,725		(254)
U.S. treasury securities						U.S. treasury securities	247,509		(1,756)

Asset values and gross unrealized losses of available-for-sale securities held for more than 12 months as of April 30, ~~2021~~2022 and January 31, ~~2021~~2022 were immaterial. ~~There was no allowance for credit losses recorded as of April 30, 2021 and January 31, 2021.~~

Note 3. Deferred Costs

Deferred costs, which consist ~~primarily~~ of deferred sales commissions, were ~~$40~~$30 million and ~~$42~~$33 million as of April 30, ~~2021~~2022 and January 31, ~~2021,~~2022, respectively. Amortization expense for the deferred costs included in sales and marketing expenses in the condensed consolidated statements of comprehensive income was $6 million ~~and $5 million~~ for each of the three months ended April 30, ~~2021~~2022 and ~~2020, respectively.~~2021. There have been 0no impairment losses recorded in relation to the costs capitalized for any period presented.

Note 4. Property and Equipment, Net

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

April 30,
2021 January 31,
2021
Land $ 3,040 $ 3,040
Building 20,984 20,984
Land improvements and building improvements 22,392 22,392
Equipment and computers 8,332 8,847
Furniture and fixtures 13,772 13,452
Leasehold improvements 13,857 13,945
Construction in progress 483 606
82,860 83,266
Less accumulated depreciation (30,612) (29,616)
Total property and equipment, net $ 52,248 $ 53,650

~~Total depreciation expense was $2 million for each of the three months ended April 30, 2021 and 2020. Land is not depreciated.~~


	April 30, 2022		January 31, 2022
Land	$	3,040	$	3,040
Building	20,984		20,984
Land improvements and building improvements	22,392		22,392
Equipment and computers	2,246		3,581
Furniture and fixtures	15,480		15,040
Leasehold improvements	19,704		19,002
Construction in progress	325		730
	84,171		84,769
Less accumulated depreciation	(30,355)		(30,274)
Total property and equipment, net	$	53,816	$	54,495


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Total depreciation expense was $2 million for each of the three months ended April 30, 2022 and 2021. Land is not depreciated.

Note 5. Goodwill and Intangible Assets

Goodwill was ~~$436~~$440 million as of ~~both~~ April 30, ~~2021~~2022 and January 31, ~~2021.~~2022.

The following schedule presents the details of intangible assets as of April 30, ~~2021~~2022 (dollar amounts in thousands):


		April 30, 2021								April 30, 2022
		Gross carrying amount		Accumulated amortization		Net		Remaining useful life (in years)		Gross carrying amount		Accumulated amortization		Net		Remaining useful life (in years)
Existing technology	Existing technology	$	26,180	$	(9,281)	$	16,899	4.5	Existing technology	$	28,580	$	(13,219)	$	15,361	3.7
Customer relationships	Customer relationships	110,643		(30,414)		80,229		7.8	Customer relationships	113,157		(41,624)		71,533		6.8
Trade name/trademarks	Trade name/trademarks	13,900		(4,649)		9,251		3.5	Trade name/trademarks	13,900		(7,289)		6,611		2.5
Other intangibles	Other intangibles	20,453		(16,666)		3,787		4.9	Other intangibles	21,405		(17,716)		3,689		3.6
		$	171,176	$	(61,010)	$	110,166			$	177,042	$	(79,848)	$	97,194

The following schedule presents the details of intangible assets as of January 31, ~~2021~~2022 (dollar amounts in thousands):


		January 31, 2021								January 31, 2022
		Gross carrying amount		Accumulated amortization		Net		Remaining useful life (in years)		Gross carrying amount		Accumulated amortization		Net		Remaining useful life (in years)
Existing technology	Existing technology	$	26,180	$	(8,367)	$	17,813	4.8	Existing technology	$	28,580	$	(12,187)	$	16,393	3.9
Customer relationships	Customer relationships	110,643		(27,741)		82,902		8.0	Customer relationships	113,157		(38,829)		74,328		7.0
Trade name/trademarks	Trade name/trademarks	13,900		(4,005)		9,895		3.8	Trade name/trademarks	13,900		(6,645)		7,255��		2.8
Other intangibles	Other intangibles	20,453		(16,468)		3,985		5.1	Other intangibles	21,405		(17,441)		3,964		3.8
		$	171,176	$	(56,581)	$	114,595			$	177,042	$	(75,102)	$	101,940

Amortization expense associated with intangible assets was ~~$4 million and~~ $5 million for the three months ended April 30, ~~2021~~2022, and ~~2020, respectively.~~$4 million for the three months ended April 30, 2021.

As of April 30, ~~2021,~~2022, the estimated amortization expense for intangible assets ~~for the next five years and thereafter is~~was as follows (in thousands):


Fiscal Year	Fiscal Year	Estimated amortization expense		Fiscal Year	Estimated amortization expense
Remaining for 2022		$	13,734
2023		18,163
Remaining for 2023				Remaining for 2023	$	14,717
2024	2024	18,160		2024	19,459
2025	2025	17,417		2025	18,557
2026	2026	13,166		2026	14,147
2027				2027	8,922
Thereafter	Thereafter	29,526		Thereafter	21,392
Total	Total	$	110,166	Total	$	97,194


Veeva Systems Inc. \| Form 10-Q			11

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Note 6. Accrued Expenses

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


		April 30, 2021		January 31, 2021			April 30, 2022		January 31, 2022
Accrued commissions	Accrued commissions	$	6,217	$	7,498	Accrued commissions	$	6,445	$	8,556
Accrued bonus	Accrued bonus	4,616		4,134		Accrued bonus	3,245		4,677
Accrued vacation(1)	Accrued vacation(1)	6,050		4,716		Accrued vacation(1)	6,728		5,546
Payroll tax payable	Payroll tax payable	10,128		10,250		Payroll tax payable	10,031		9,487
Accrued other compensation and benefits	Accrued other compensation and benefits	4,709		3,812		Accrued other compensation and benefits	6,765		5,568
Total accrued compensation and benefits	Total accrued compensation and benefits	$	31,720	$	30,410	Total accrued compensation and benefits	$	33,214	$	33,834
Accrued fees payable to salesforce.com	Accrued fees payable to salesforce.com	6,533		$	6,381	Accrued fees payable to salesforce.com	6,672		$	6,521

Taxes payable	Taxes payable	11,420		13,598		Taxes payable	8,252		9,743
Accrued third-party professional services subcontractors' fees	Accrued third-party professional services subcontractors' fees	1,631		1,515		Accrued third-party professional services subcontractors' fees	2,326		1,961
Other accrued expenses	Other accrued expenses	13,132		9,488		Other accrued expenses	16,681		17,884
Total accrued expenses and other current liabilities	Total accrued expenses and other current liabilities	$	32,716	$	30,982	Total accrued expenses and other current liabilities	$	33,931	$	36,109

(1) Represents accrued vacation primarily for international employees. Vacation does not accrue for most U.S. employees.						(1) Represents accrued vacation primarily for international employees. Vacation does not accrue for most U.S. employees.

Note 7. Fair Value Measurements

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

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

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

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

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

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


12			Veeva Systems Inc. \| Form 10-Q

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The following table presents the fair value hierarchy for financial assets measured at fair value on a recurring basis as of April 30, ~~2021~~2022 (in thousands):


		Level 1		Level 2		Total			Level 1		Level 2		Total
Assets	Assets							Assets
Cash equivalents:	Cash equivalents:							Cash equivalents:
Money market funds	Money market funds	$	626,523	$	0	$	626,523	Money market funds	$	521,734	$	—	$	521,734

Certificates of deposit								Certificates of deposit	—		12,000		12,000
U.S. treasury securities								U.S. treasury securities	—		69,960		69,960
Commercial paper	Commercial paper	0		22,949		22,949		Commercial paper	—		59,043		59,043
Corporate notes and bonds	Corporate notes and bonds	0		2,630		2,630		Corporate notes and bonds	—		6,846		6,846
Asset-backed securities								Asset-backed securities	—		2,545		2,545
Short-term investments:	Short-term investments:							Short-term investments:
Certificates of deposits		0		22,368		22,368
Certificates of deposit								Certificates of deposit	—		63,654		63,654
Asset-backed securities	Asset-backed securities	0		144,833		144,833		Asset-backed securities	—		236,180		236,180
Commercial paper	Commercial paper	0		59,424		59,424		Commercial paper	—		151,262		151,262
Corporate notes and bonds	Corporate notes and bonds	0		537,143		537,143		Corporate notes and bonds	—		787,561		787,561
Foreign government bonds	Foreign government bonds	0		32,124		32,124		Foreign government bonds	—		24,100		24,100
U.S. agency obligations	U.S. agency obligations	0		52,839		52,839		U.S. agency obligations	—		27,370		27,370
U.S. treasury securities	U.S. treasury securities	0		116,722		116,722		U.S. treasury securities	—		308,428		308,428
Foreign currency derivative contracts	Foreign currency derivative contracts	0		9		9		Foreign currency derivative contracts	—		1,804		1,804
Total financial assets	Total financial assets	$	626,523	$	991,041	$	1,617,564	Total financial assets	$	521,734	$	1,750,753	$	2,272,487

The following table presents the fair value hierarchy for financial assets measured at fair value on a recurring basis as of January 31, ~~2021~~2022 (in thousands):


		Level 1		Level 2		Total			Level 1		Level 2		Total
Assets	Assets							Assets
Cash equivalents:	Cash equivalents:							Cash equivalents:
Money market funds	Money market funds	$	259,937	$	0	$	259,937	Money market funds	$	428,411	$	—	$	428,411
U.S. treasury securities		0		15,520		15,520
Corporate notes and bonds								Corporate notes and bonds	—		5,853		5,853
Asset-backed securities								Asset-backed securities	—		2,568		2,568
Short-term investments:	Short-term investments:							Short-term investments:
Certificates of deposits		0		17,364		17,364
Certificates of deposit								Certificates of deposit	—		13,485		13,485
Asset-backed securities	Asset-backed securities	0		126,576		126,576		Asset-backed securities	—		190,289		190,289
Commercial paper	Commercial paper	0		57,396		57,396		Commercial paper	—		29,430		29,430
Corporate notes and bonds	Corporate notes and bonds	0		431,047		431,047		Corporate notes and bonds	—		663,909		663,909
Foreign government bonds	Foreign government bonds	0		31,898		31,898		Foreign government bonds	—		24,411		24,411
U.S. agency obligations	U.S. agency obligations	0		52,875		52,875		U.S. agency obligations	—		27,736		27,736
U.S. treasury securities	U.S. treasury securities	0		215,966		215,966		U.S. treasury securities	—		288,804		288,804
Foreign currency derivative contracts	Foreign currency derivative contracts	0		440		440		Foreign currency derivative contracts	—		1,222		1,222
Total		$	259,937	$	949,082	$	1,209,019
Liabilities
Foreign currency derivative contracts		$	0	$	72	$	72
Total		$	0	$	72	$	72
Total financial assets								Total financial assets	$	428,411	$	1,247,707	$	1,676,118

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. WeThese forward contracts are not designated as hedging instruments under applicable accounting guidance, and therefore, we account for ~~derivative instruments~~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. We recognized realized foreign currency gains of $4 million and $1 million for the three months ended April 30, ~~2021. Foreign currency gains were immaterial for the three months ended April 30, 2020.~~2022 and 2021, respectively.

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


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		April 30, 2021		January 31, 2021			April 30, 2022		January 31, 2022
Notional amount of foreign currency derivative contracts	Notional amount of foreign currency derivative contracts	$	28,317	$	52,516	Notional amount of foreign currency derivative contracts	$	64,483	$	87,097
Fair value of foreign currency derivative contracts	Fair value of foreign currency derivative contracts	28,309		52,148		Fair value of foreign currency derivative contracts	62,680		85,876

Details on outstanding balance sheet hedges are presented below as of the date shown below (in thousands):

Derivatives not designated as hedging instruments

Balance sheet location

April 30,
2021

January 31,
2021

Derivatives not designated as hedging instruments

Balance sheet location

April 30,
2022

January 31,
2022

Derivative Assets

Foreign currency derivative contracts

Prepaid expenses and other current assets

440

Foreign currency derivative contracts

Prepaid expenses and other current assets

1,804

1,222

Derivative Liabilities

Foreign currency derivative contracts

Accrued expenses

Note 8. Income Taxes

For the three months ended April 30, ~~2021~~2022 and ~~2020,~~2021, our effective tax rates were ~~13.1%~~23.2% and ~~4.8%~~13.1%, respectively. During the three months ended April 30, ~~2021~~2022, as compared to the prior year period, our effective tax rate increased primarily due to ~~the increase in income before income taxes for the period combined with~~ a ~~decrease~~reduction in excess tax benefits related to equity compensation. We recognized ~~such~~ excess tax benefits in our provision for income taxes of ~~$17~~$5 million and ~~$20~~$17 million for the three months ended April 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

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

Of the beginning deferred revenue balance for the respective periods, we recognized ~~$249 million and $192~~$294 million of subscription services revenue during the three months ended April 30, ~~2021~~2022, and ~~2020,~~$249 million for the three months ended April 30, 2021, respectively. Professional services revenue recognized in the same periods from deferred revenue balances at the beginning of the respective periods was immaterial.

Transaction Price Allocated to the Remaining Performance Obligations

Transaction price allocated to the remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-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 April 30, ~~2021,~~2022, approximately ~~$1,244~~$1,493 million of revenue is expected to be recognized from remaining performance obligations for subscription services contracts. We expect to recognize revenue on approximately ~~75%~~77% 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 were ~~$25~~$32 million and ~~$20~~$28 million as of April 30, ~~2021~~2022 and January 31, ~~2021,~~2022, 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 were ~~$26~~$30 million and ~~$27~~$36 million as of April 30, ~~2021~~2022 and January 31, ~~2021,~~2022, respectively.


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Note 10. Leases

We have operating ~~and finance~~ leases for our corporate ~~offices and certain equipment.~~offices. Our leases have various expiration dates through 2030, some of which include options to extend the leases for up to nine years. Additionally, we are the sublessor for certain office space. Our sublease income for the three months ended April 30, ~~2021~~2022 and ~~2020~~2021 was immaterial.

For each of the three months ended April 30, ~~2021~~2022 and ~~2020,~~2021, our operating lease expense was $3 million. ~~Our finance lease expense was immaterial for both the three months ended April 30, 2021 and 2020.~~


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


		Three months ended April 30,					Three months ended April 30,
		2021		2020			2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	3,303	$	2,563	Operating cash flows from operating leases	$	2,566	$	3,303
Right-of-use assets obtained in exchange for lease obligations:	Right-of-use assets obtained in exchange for lease obligations:					Right-of-use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	243		306		Operating leases	1,599		243

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


		April 30, 2021			January 31, 2021				April 30, 2022			January 31, 2022
Operating Leases	Operating Leases							Operating Leases
Lease right-of-use assets	Lease right-of-use assets	$	53,776		$	56,917		Lease right-of-use assets	$	48,887		$	49,640
Lease liabilities	Lease liabilities	$	11,184		$	11,347		Lease liabilities	$	11,606		$	10,981
Lease liabilities, noncurrent	Lease liabilities, noncurrent	48,672			51,393			Lease liabilities, noncurrent	42,462			43,607
Total operating lease liabilities	Total operating lease liabilities	$	59,856		$	62,740		Total operating lease liabilities	$	54,068		$	54,588
Weighted Average Remaining Lease Term	Weighted Average Remaining Lease Term	6.6 years			6.7 years			Weighted Average Remaining Lease Term	6.0 years			6.0 years
Weighted Average Discount Rate	Weighted Average Discount Rate	3.8		%	3.8		%	Weighted Average Discount Rate	3.7		%	3.7		%

As of April 30, ~~2021,~~2022, remaining maturities of operating lease liabilities are as follows (in thousands):


Fiscal Year	Fiscal Year			Fiscal Year
Remaining for 2022		$	9,632
2023		11,410
Remaining for 2023				Remaining for 2023	$	10,013
2024	2024	10,641		2024	12,346
2025	2025	7,852		2025	9,138
2026	2026	6,916		2026	7,360
2027				2027	6,475
Thereafter	Thereafter	21,606		Thereafter	15,010
Total lease payments	Total lease payments	68,057		Total lease payments	60,342
Less imputed interest	Less imputed interest	(8,201)		Less imputed interest	(6,274)
Total	Total	$	59,856	Total	$	54,068


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Note 11. Stockholders’ Equity

Stock Option Activity

A summary of stock option activity for the three months ended April 30, ~~2021~~2022 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, 2021 12,761,289 $ 57.48 5.0 $ 2,794
Options granted 1,007,790 276.50
Options exercised (485,037) 36.29
Options forfeited/cancelled (105,892) 132.55
Options outstanding at April 30, 2021 13,178,150 $ 74.41 5.2 $ 2,742
Options vested and exercisable at April 30, 2021 7,195,626 $ 27.77 3.2 $ 1,833
Options vested and exercisable at April 30, 2021 and expected to vest thereafter 13,178,150 $ 74.41 5.2 $ 2,742


	Number of shares	Weighted average exercise price		Weighted average remaining contractual term (in years)	Aggregate intrinsic value (in millions)
Options outstanding at January 31, 2022	12,090,522	$	77.89	4.6	$	1,964
Options granted	3,023,597	207.34
Options exercised	(482,436)	33.77
Options forfeited/cancelled	(99,109)	208.79
Options outstanding at April 30, 2022	14,532,574	$	105.40	5.6	$	1,296
Options vested and exercisable at April 30, 2022	7,627,254	$	47.63	3.1	$	1,048
Options vested and exercisable at April 30, 2022 and expected to vest thereafter	14,532,574	$	105.40	5.6	$	1,296

The options granted during the three months ended April 30, ~~2021~~2022 were predominantly made in connection with our annual performance review cycle. The weighted average grant-date fair value of options granted was ~~$108.50~~$88.82 per option for the three months ended April 30, ~~2021.~~


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2022.

As of April 30, ~~2021,~~2022, there was ~~$300.1~~$463 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~~3.1 years.

As of April 30, ~~2021,~~2022, 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 ~~$114.6~~$83 million for the three months ended April 30, ~~2021.~~2022.

~~Stock-Based Compensation~~Stock Option Valuation Assumptions

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


		Three months ended April 30,							Three months ended April 30,
		2021				2020					2022					2021
Volatility	Volatility	39%				39%	-	41%				Volatility	37%		-	38%		39%
Expected term (in years)	Expected term (in years)	6.25				6.25	-	7.25						Expected term (in years)		6.00	-	7.00	6.25
Risk-free interest rate	Risk-free interest rate	0.68	%	-	1.07%	0.51%	-	1.43%						Risk-free interest rate		1.86%	-	2.82%	0.68%	-	1.07%
Dividend yield	Dividend yield	0%				0%				Dividend yield	—%					—%

Restricted Stock Units

A summary of restricted stock unit (RSU) activity for the three months ended April 30, ~~2021~~2022 is as follows:


		Unreleased restricted stock units	Weighted average grant date fair value			Unreleased restricted stock units	Weighted average grant date fair value
Balance at January 31, 2021		1,032,215	$	121.98
Balance at January 31, 2022					Balance at January 31, 2022	619,388	$	175.23
RSUs granted	RSUs granted	394,324	278.17		RSUs granted	1,400,529	207.30
RSUs vested	RSUs vested	(258,511)	135.23		RSUs vested	(185,800)	213.36
RSUs forfeited/cancelled	RSUs forfeited/cancelled	(16,277)	138.00		RSUs forfeited/cancelled	(21,990)	192.94
Balance at April 30, 2021		1,151,751	172.24
Balance at April 30, 2022					Balance at April 30, 2022	1,812,127	195.90


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As of April 30, ~~2021,~~2022, there was a total of ~~$185.2~~$334 million in unrecognized compensation cost related to unvested RSUs. This cost is expected to be recognized over a weighted-average period of approximately ~~2.1~~2.3 years. The total intrinsic value of RSUs vested was ~~$71.5~~$41 million for the three months ended April 30, ~~2021, respectively.~~2022.

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.

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):


		Three months ended April 30,								Three months ended April 30,
		2021				2020					2022		2021
		Class A		Class B		Class A		Class B				Class A				Class B			Class A			Class B
Basic	Basic
Numerator	Numerator
Net income, basic	Net income, basic	$	104,319	$	11,248	$	77,777	$	8,793				Net income, basic	$	90,548		$	9,567		$	104,319		$	11,248
Denominator	Denominator												Denominator
Weighted average shares used in computing net income per share, basic	Weighted average shares used in computing net income per share, basic	137,607		14,837		134,353		15,188					Weighted average shares used in computing net income per share, basic	139,749			14,765			137,607			14,837
Net income per share, basic	Net income per share, basic	$	0.76	$	0.76	$	0.58	$	0.58				Net income per share, basic	$	0.65		$	0.65		$	0.76		$	0.76
Diluted	Diluted												Diluted
Numerator	Numerator												Numerator
Net income, basic	Net income, basic	$	104,319	$	11,248	$	77,777	$	8,793				Net income, basic	$	90,548		$	9,567		$	104,319		$	11,248
Reallocation as a result of conversion of Class B to Class A common stock:	Reallocation as a result of conversion of Class B to Class A common stock:												Reallocation as a result of conversion of Class B to Class A common stock:
Net income, basic	Net income, basic	11,248		0		8,793		0					Net income, basic	9,567			—			11,248			—
Reallocation of net income to Class B common stock	Reallocation of net income to Class B common stock	0		6,282		0		4,844					Reallocation of net income to Class B common stock	—			4,146			—			6,282
Net income, diluted	Net income, diluted	$	115,567	$	17,530	$	86,570	$	13,637				Net income, diluted	$	100,115		$	13,713		$	115,567		$	17,530
Denominator	Denominator												Denominator
Number of shares used for basic net income per share computation	Number of shares used for basic net income per share computation	137,607		14,837		134,353		15,188					Number of shares used for basic net income per share computation	139,749			14,765			137,607			14,837
Conversion of Class B to Class A common stock	Conversion of Class B to Class A common stock	14,837		0		15,188		0					Conversion of Class B to Class A common stock	14,765			—			14,837			—
Effect of potentially dilutive common shares	Effect of potentially dilutive common shares	9,769		9,769		9,933		9,933					Effect of potentially dilutive common shares	7,414			7,414			9,769			9,769
Weighted average shares used in computing net income per share, diluted	Weighted average shares used in computing net income per share, diluted	162,213		24,606		159,474		25,121					Weighted average shares used in computing net income per share, diluted	161,928			22,179			162,213			24,606
Net income per share, diluted	Net income per share, diluted	$	0.71	$	0.71	$	0.54	$	0.54				Net income per share, diluted	$	0.62		$	0.62		$	0.71		$	0.71

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

Three months ended April 30,
2021 2020
Options and awards to purchase shares not included in the computation of diluted net income per share because their inclusion would be anti-dilutive 348,495 2,386,498


~~Veeva Systems Inc. \| Form 10-Q~~			17


	Three months ended April 30,
	2022	2021
Options and awards to purchase shares not included in the computation of diluted net income per share because their inclusion would be anti-dilutive	2,295,241	348,495

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Note 13. 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


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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 ~~in the litigation~~ that a permissive adverse inference instruction be issued to the jury with respect to ~~Veeva’s failure to preserve~~ certain ~~documents. Such an instruction would likely instruct~~documents that were not preserved by Veeva. Should the trial judge accept the recommendation, the jury ~~that it is~~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 ~~are appealing this~~appealed the special master’s ruling and IQVIA’s fee award to the federal district court ~~judge assigned to the case.~~judge.

Fact discovery is largely complete and we expect to complete expert discovery ~~is currently in process.~~

by November 15, 2022. 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


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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.~~Jersey (Veeva Systems Inc. v. IQVIA Inc. (No. 2:19-cv-18558)).

On March 24, 2020, we amended our complaint in the Veeva Nitro Action to include allegations of IQVIA’s anticompetitive conduct as to additional Veeva software applications, such as Veeva Andi, Veeva Align, and Veeva Vault MedComms; additional examples of IQVIA’s monopolistic behavior against Veeva Nitro; IQVIA’s unlawful


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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. On September 21, 2021, the court lifted the stay. We expect to complete fact discovery by June 30, 2022, and to complete expert discovery by November 15, 2022.

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 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 (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 5five 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~~Fact 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 its 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. AThe trial ~~date has been~~in this matter is currently set for ~~September 20, 2021.~~July 18, 2022. 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~~


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We have a value-added reseller agreement with salesforce.com, inc. for our use of the Salesforce1 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 April 30, 2021, we remained obligated to pay fees of at least $35 million prior to September 1, 2025 in connection with this agreement.

Note 14. Revenues by Product

~~Our industry cloud solutions are grouped~~We group our revenues into 2 ~~key~~ product ~~areas—~~areas: Commercial Solutions and R&D Solutions. Commercial Solutions revenues consist of revenues from our Veeva Commercial Cloud, Veeva Data Cloud and Veeva ~~Vault.~~Claims solutions. R&D Solutions consist of revenues from our Veeva ~~Commercial~~Development Cloud, ~~is a suite of software~~Veeva RegulatoryOne, and ~~data 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.~~QualityOne solutions.

Total revenues consist of the following (in thousands):


		Three months ended April 30,				Three months ended April 30,
		2021		2020				2022		2021
Subscription services	Subscription services						Subscription services
Veeva Commercial Cloud		$	168,458	$	142,577
Veeva Vault		172,661		127,658
Commercial Solutions(1)							Commercial Solutions(1)	$	227,724	$	207,845
R&D Solutions(1)							R&D Solutions(1)	174,908		133,274
Total subscription services	Total subscription services	$	341,119	$	270,235		Total subscription services	$	402,632	$	341,119
Professional services	Professional services						Professional services
Veeva Commercial Cloud		$	36,026	$	27,376
Veeva Vault		56,428		39,495
Commercial Solutions(1)							Commercial Solutions(1)	$	43,321	$	43,598
R&D Solutions(1)							R&D Solutions(1)	59,149		48,856
Total professional services	Total professional services	$	92,454	$	66,871		Total professional services	$	102,470	$	92,454
Total revenues	Total revenues	$	433,573	$	337,106		Total revenues	$	505,102	$	433,573
(1) Certain prior period product revenues have been adjusted to match current period presentation.							(1) Certain prior period product revenues have been adjusted to match current period presentation.

Note 15. Information about Geographic Areas

We track and allocate revenues by principal geographic area rather than by individual country, which makes it impractical to disclose revenues for the United States or other specific foreign countries. We measure subscription services revenue primarily by the estimated location of the end users in each geographic area for ~~Veeva~~our Commercial ~~Cloud~~Solutions and primarily by the estimated location of usage in each geographic area for ~~Veeva Vault.~~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 April 30,				Three months ended April 30,
		2021		2020				2022		2021
Revenues by geography	Revenues by geography						Revenues by geography
North America	North America	$	246,300	$	195,657		North America	$	294,771	$	246,300
Europe	Europe	121,304		89,422			Europe	138,962		121,304
Asia Pacific	Asia Pacific	53,632		42,292			Asia Pacific	57,713		53,632
Middle East, Africa, and Latin America	Middle East, Africa, and Latin America	12,337		9,735			Middle East, Africa, and Latin America	13,656		12,337
Total revenues	Total revenues	$	433,573	$	337,106		Total revenues	$	505,102	$	433,573

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


	April 30, 2022		January 31, 2022
Long-lived assets by geography
North America	$	44,890	$	45,625
Europe	5,968		6,135
Asia Pacific	1,293		1,335
Middle East, Africa, and Latin America	$	1,665	1,400
Total long-lived assets	$	53,816	$	54,495


20			Veeva Systems Inc. \| Form 10-Q

~~Table of Contents~~

April 30,
2021 January 31,
2021
Long-lived assets by geography
North America $ 45,192 $ 46,285
Europe 5,298 5,525
Asia Pacific 1,324 1,359
Middle East, Africa, and Latin America $ 434 481
Total long-lived assets $ 52,248 $ 53,650


~~Veeva Systems Inc. \| Form 10-Q~~			21

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in this report. In addition to historical condensed consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

Overview

In April 2022 we announced that our solutions will be grouped into three major product categories going forward—Veeva Commercial Cloud, Veeva Data Cloud, and Veeva Development Cloud. We also announced that our data offerings previously offered under the Veeva Data Cloud brand are now offered under the Veeva Compass brand. Veeva Data Cloud is now comprised of the following solutions formerly categorized as Commercial Cloud offerings: Veeva Compass, Veeva Link, and Veeva OpenData. For financial reporting purposes, revenues associated with our Veeva Commercial Cloud, Veeva Data Cloud and Veeva Claims solutions are classified as “Commercial Solutions” revenues, and revenues associated with our Veeva Development Cloud, Veeva RegulatoryOne, and Veeva QualityOne solutions are classified as “R&D Solutions” revenues.

In our fiscal year ended January 31, ~~2021,~~2022, we derived approximately ~~51%~~59% and ~~49%~~41% of our subscription services revenues and ~~49%~~56% and ~~51%~~44% of our total revenues from our ~~Veeva~~ Commercial ~~Cloud solutions~~Solutions and ~~Veeva Vault solutions,~~R&D Solutions, respectively. For the three months ended April 30, ~~2021,~~2022, we derived approximately ~~49%~~57% and ~~51%~~43% of our subscription services revenues and ~~47%~~54% and ~~53%~~46% of our total revenues from our ~~Veeva~~ Commercial ~~Cloud solutions~~Solutions and ~~Veeva Vault solutions,~~R&D Solutions, respectively. The contribution of subscription services revenues and total revenues associated with our ~~Veeva Vault solutions~~R&D Solutions are expected to continue to increase as a percentage of subscription services revenues and total revenues in the future. We also offer certain of our ~~Veeva Vault solutions~~R&D Solutions to industries outside the life sciences industry primarily in North America and Europe.

For our fiscal years ended January 31, 2022, 2021, ~~2020,~~ and ~~2019,~~2020, our total revenues were $1,851 million, $1,465 million, ~~$1,104 million~~ and ~~$862~~$1,104 million, respectively, representing year-over-year growth in total revenues of 26% in our fiscal year ended January 31, 2022 and 33% in our fiscal year ended January ~~31, 2021 and 28% in our fiscal year ended January 31, 2020.~~30, 2021. For our fiscal years ended January 31, 2022, 2021, ~~2020,~~ and ~~2019,~~2020, our subscription services revenues were $1,484 million, $1,179 million, ~~$896 million,~~ and ~~$694~~$896 million, respectively, representing year-over-year growth in subscription services revenues of 26% in our fiscal year ended January 31, 2022, and 32% in our fiscal year ended January ~~31, 2021, and 29% in our fiscal year ended January 31, 2020.~~30, 2021. Please note that our total revenues and subscription services revenues for our fiscal year ended January 31, 2020 only included revenue contribution from the acquired Crossix and Physicians World businesses in the fourth quarter of that fiscal year. We expect the growth rate of our total revenues and subscription services revenues to decline incompared to the ~~future.~~prior fiscal year. We generated net income of $427 million, $380 million, ~~$301 million,~~ and ~~$230~~$301 million for our fiscal years ended January 31, 2022, 2021, ~~2020,~~ and ~~2019,~~2020, respectively.


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As of January 31, 2022, 2021, ~~2020,~~ and ~~2019,~~2020, we served 1205, 993, ~~861,~~ and ~~719~~861 customers, respectively. As of January 31, 2022, 2021, ~~2020,~~ and ~~2019,~~2020, we had ~~432, 390,~~653, 572, and ~~335 Veeva~~523 Commercial ~~Cloud~~Solutions customers, respectively, and ~~852, 715,~~860, 664, and ~~574 Veeva Vault~~538 R&D Solutions customers, respectively. These customer count totals are net of customer attrition during each period.The combined customer counts for ~~Veeva~~ Commercial ~~Cloud~~Solutions and ~~Veeva Vault~~R&D Solutions exceed the total customer count in each year because some customers subscribe to products in both areas. ~~Veeva~~ Commercial ~~Cloud customers are those customers that have at least one~~Solutions consist of the following products: Veeva CRM, Veeva CLM, Veeva CRM Approved Email, Veeva CRM Engage, Veeva Align, Veeva CRM Events Management (including services delivered via Veeva Digital Events), Veeva Nitro, Veeva Andi, Veeva OpenData, Veeva Link, Veeva Network Customer Master, Veeva Crossix, or Veeva Data Cloud. Veeva Vault customers are those customers that have at least one Vault product.our cloud software, data, and analytics products built specifically to more efficiently and effectively commercialize our customers’ products. R&D Solutions consist of our clinical, quality, regulatory, and safety products. Many of our ~~Veeva Vault~~ applications for R&D are used by smaller, earlier stage, pre-commercial companies, some of which may not reach the commercialization stage. Thus, the potential number of ~~Veeva Vault~~R&D Solutions customers is ~~significantly~~ higher than the potential number of ~~Veeva~~ Commercial ~~Cloud~~Solutions customers.

For the three months ended April 30, ~~2021~~2022 and ~~2020,~~2021, our total revenues were ~~$434~~$505 million and ~~$337~~$434 million, respectively, representing year-over-year growth in total revenues of ~~29%~~16%. For the three months ended April 30,


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~~2021~~ 2022 and ~~2020,~~2021, our subscription services revenues were ~~$341~~$403 million and ~~$270~~$341 million, respectively, representing year-over-year growth in subscription services revenues of ~~26%~~18%. We generated net income of ~~$116~~$100 million and ~~$87~~$116 million for the three months ended April 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Our Conversion to PBC

On February 1, 2021, we became a Delaware public benefit corporation (PBC), and we amended our certificate of incorporation to include the following public benefit purpose: “to provide products and services that are intended to help make the industries we serve more productive, and to create high-quality employment opportunities in the communities in which we operate.” When making decisions, our directors have a fiduciary duty to balance the financial interests of stockholders, the best interests of other stakeholders materially affected by our conduct (including customers, employees, partners, and the communities in which we operate), and the pursuit of our public benefit purpose. For more information on our conversion to a PBC and associated risks, see “Risk Factors.”

The Continuing Impact of the COVID-19 Pandemic

The worldwide outbreak of COVID-19 has had and continues to have a widespread and unpredictable worldwide impact on our business operations, the life sciences industry, healthcare systems, financial markets, and the global economy. While the impact of COVID-19 on our operational and financial performance has not been materially negative to date, the future impact is uncertain and will depend on future developments, including the duration and spread of the outbreak, government responses to the pandemic, the rate of vaccinations, the impact on our customers, the impact on our employees, the extent of further adverse impacts to the economy, and the scale and pace of economic recovery and resumption of normal business activities, including the rollout of COVID-19 vaccines ~~and~~globally, the lifting of restrictions on movement, and the results of outbreaks and variants, all of which cannot be predicted with certainty.

In response to the COVID-19 outbreak, we shifted most of our customer, employee, and industry events to virtual-only experiences, and we continue to monitor when larger in-person events should resume. We have begun to lift certain employee travel restrictions and plan to open most of our U.S. offices in July. At the time of this filing, the substantial majority of employees continue to work from home, including employees at our corporate headquarters in Pleasanton, California. Many of our customers have implemented travel restrictions and remote work measures, which may limit our ability to sell or provide professional services to them in the future. Certain of our businesses were negatively impacted by COVID-19 in our fiscal year ended January 31, 2021 and that may continue for the foreseeable future. We may also experience requests from customers for lengthened payment terms or less favorable billing terms that could adversely impact our financial performance. Such requests to date have not been significant but may increase in the future. Due to our subscription-based business model, the effect of COVID-19, and any impact to our sales efforts, may not be fully reflected in our results of operations until future periods, if at all.

At the same time, COVID-19 has necessitated the adoption of digital communication channels and remote working technology within the life sciences industry at a rapid pace. This transition has accelerated the use and adoption of certain of our applications, including Veeva CRM Engage Meeting and Veeva CRM Approved Email, and that may continue in the future with respect to these and other of our Veeva Commercial Cloud and Veeva Vault solutions that enable remote interactions.

Certain impacts of the COVID-19 pandemic and resulting changes in business practice may be enduring over the long term and may result in significant changes in business practice within the technology industry, the life sciences industry, and the world economy generally. For example, while we have resumed certain in-person customer, employee, and industry events, some of our customers continue to have travel and in-person meeting restrictions that limit our ability to conduct business in person and we cannot predict how long such limitations will remain in effect. Further, the extent to which remote work will remain common practice or become increasingly prevalent after the COVID-19 pandemic ends is not certain and may have significant impacts on hiring practices, management practices, expense structures and investments, and other aspects of our business and the businesses of our customers. We have adopted a permanent “Work Anywhere” policy, which generally gives employees the flexibility to work in an office or at home on any given day, with certain job-specific restrictions. We believe this program is beneficial to our business but we have limited experience with the program. Similarly, the extent to which virtual meetings and interactions continue to be used or preferred in lieu of in-person interactions may significantly change business practices for us and our customers, and, in turn, may impact demand for our products and services. For example, if our customers reduce sales representatives in response to an increasing preference for virtual meetings with doctors, demand for our core CRM application may decline. ~~We expect~~In the quarter ended October 31, 2020, we disclosed that we expected life sciences companies to reduce the number of sales representatives that they employ by roughly 10% ~~over the next one~~. We currently expect most of these reductions to ~~two years, which~~take place during our fiscal year ending January 31, 2023, with some reductions still occurring in our fiscal year ending January 31, 2024. Such reductions could negatively impact sales of our solutions, including Veeva CRM and certain of our other Commercial ~~Cloud applications in particular,~~Solutions, but


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we cannot be certain such reductions will happen or of the timing or magnitude of such reductions. At the same time, demand for our products that enable virtual interactions with doctors and clinical trial participants may increase. We cannot accurately predict how such changes may impact Veeva's results over the long term.

Impacts of the Russian Invasion of Ukraine


~~Veeva Systems Inc. \| Form 10-Q~~			23

We are closely monitoring the impact of the Russian invasion of Ukraine and its global impacts. While the conflict is still evolving and the outcome remains highly uncertain, we do not believe the Russian invasion will have a material impact on our business and results of operations. We do not currently have office locations or employees in Russia and our revenues from sales to Russian entities were limited. However, if the conflict continues or worsens, leading to greater disruptions and uncertainty within the life sciences industry or global economy, our business and results of operations could be negatively impacted.

~~Table of Contents~~

Key Factors Affecting Our Performance

Investment in Growth. We have invested and intend to continue to invest aggressively in expanding the breadth and depth of our product portfolio, including through acquisitions. We expect to continue to invest in research and development to expand existing solutions and build new solutions; in sales and marketing to promote our solutions to new and existing customers and in existing and expanded geographies and industries; in professional services and business consulting to help ensure customer success; and in other operational and administrative functions to support our expected growth. We expect that our headcount will increase as a result of these investments. We also expect our total operating expenses will continue to increase over time, which could have a negative impact on our operating margin.

Adoption of Our Solutions by Existing and New Customers. Most of our customers initially deploy our solutions to a limited number of end users within a division or geography and may only initially deploy a limited set of our available solutions. Our future growth is dependent upon our existing customers’ continued success and their renewals of subscriptions to our solutions, expanded deployment of our solutions within their organizations, and their purchase of subscriptions to additional solutions. Our growth is also dependent on the adoption of our solutions by new customers.

Subscription Services Revenue Retention Rate. A key factor to our success is the renewal and expansion of our existing subscription agreements with our customers. We calculate our annual subscription services revenue retention rate for a particular fiscal year by dividing (i) annualized subscription revenue as of the last day of that fiscal year from those customers that were also customers as of the last day of the prior fiscal year by (ii) the annualized subscription revenue from all customers as of the last day of the prior fiscal year. Annualized subscription revenue is calculated by multiplying the daily subscription revenue recognized on the last day of the fiscal year by 365. This calculation includes the impact on our revenues from customer non-renewals, deployments of additional users or decreases in users, deployments of additional solutions or discontinued use of solutions by our customers, and price changes for our solutions. Historically, the impact of price changes on our subscription services revenue retention rate has been minimal. For our fiscal years ended January 31, 2022, 2021, ~~2020,~~ and ~~2019,~~2020, our subscription services revenue retention rate was ~~124%~~119%, ~~121%~~124%, and ~~122%~~121%, respectively.

Components of Results of Operations

Revenues

We derive our revenues primarily from subscription services fees and professional services fees. Subscription services revenues consist of fees from customers accessing our cloud-based software solutions and fees for our data solutions. Professional services and other revenues consist primarily of fees from implementation services, configuration, data services, training, and managed services related to our solutions and services related to our Veeva Business Consulting offering. For the three months ended April 30, ~~2021,~~2022, subscription services revenues constituted ~~79%~~80% of total revenues and professional services and other revenues constituted ~~21%~~20% of total revenues.

We generally enter into master subscription agreements with our customers and count each distinct master subscription agreement that has not been terminated or expired and that has orders for which we have recognized revenue in the quarter as a distinct customer for purposes of determining our total number of current customers as of the end of that quarter. We generally enter into a single master subscription agreement with each customer, although in some instances, affiliated legal entities within the same corporate family may enter into separate master


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subscription agreements. Conversely, affiliated legal entities that maintain distinct master service agreements may choose to consolidate their orders under a single master service agreement, and, in that circumstance, our customer count would decrease. Divisions, subsidiaries, and operating units of our customers often place distinct orders for our subscription services under the same master subscription agreement, and we do not count such distinct orders as new customers for purposes of determining our total customer count. For purposes of determining customers of Veeva Crossix that do not contract under a master subscription agreement, we count each entity that has a statement of work or services agreement and a recurring known payment obligation as a distinct customer if such entity is not otherwise a customer of ours. For Veeva Crossix, we do not count as distinct customers agencies contracting with us on behalf of brands within life sciences companies.

New subscription orders for our core Veeva CRM application generally have a one-year term. If a customer adds end users or additional ~~Veeva~~ Commercial ~~Cloud applications~~Solutions to an existing order for our core Veeva CRM application, such additional orders will generally be coterminous with the anniversary date of the core Veeva CRM


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order, and as a result, orders for additional end users or additional ~~Veeva~~ Commercial ~~Cloud applications~~Solutions will commonly have an initial term of less than one year.

~~With respect to applications other than our core Veeva CRM application and particularly~~Particularly with respect to our ~~Veeva Vault applications,~~R&D Solutions, we have entered into a number of orders with multi-year terms. The fees associated with such orders are typically not based on the number of end-users and typically escalate over the term of such orders at a pre-agreed rate to account for, among other factors, implementation and adoption timing and planned increased usage by the customer. There are timing differences between billings and revenue recognition with respect to certain of our multi-year orders with escalating fees which will result in fluctuations in deferred revenue and unbilled accounts receivable balances. For instance, when the amounts we are entitled to invoice in any period pursuant to multi-year orders with escalating fees are less than the revenue recognized in accordance with relevant accounting standards, we will accrue an unbilled accounts receivable balance (a contract asset) related to such orders. In the same scenario, the net deferred revenue we would record in connection with such orders will be less because we will be recognizing more revenue than we bill earlier in the term of such multi-year orders.

Our subscription orders are generally billed at the beginning of the subscription period in annual or quarterly increments, which means the annualized value of such orders may not be completely reflected in deferred revenue at any single point in time. Also, particularly with respect to orders for our ~~Veeva~~ Commercial ~~Cloud orders,~~Solutions, because the term of orders for additional end users or applications is commonly less than one year, the annualized value of such orders may not be completely reflected in deferred revenue at any single point in time. We have also agreed from time to time, and may agree in the future, to allow customers to change the renewal dates of their orders to, for example, align more closely with a customer’s annual budget process or to align with the renewal dates of other orders placed by other entities within the same corporate control group, or to change payment terms from annual to quarterly, or vice versa. Such changes typically result in an order of less than one year as necessary to align all orders to the desired renewal date and, thus, may result in a lesser increase to deferred revenue than if the adjustment had not occurred. Additionally, changes in renewal dates may change the fiscal quarter in which deferred revenue associated with a particular order is booked. Accordingly, we do not believe that changes on a quarterly basis in deferred revenue, unbilled accounts receivable, or calculated billings, a metric commonly cited by financial analysts, are accurate indicators of future revenues for any given period of time. We define the term calculated billings for any period to mean revenue for the period plus the change in deferred revenue from the immediately preceding period minus the change in unbilled accounts receivable (contract asset) from the immediately preceding period.

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 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. Our agreements typically provide that orders will automatically renew unless notice of non-renewal is provided in advance. Subscription services revenues are affected primarily by the number of customers, the scope of the subscription purchased by each customer (for example, the number of end users or other subscription usage metric) and the number of solutions subscribed to by each customer.

We utilize our own personnel to perform our professional services and business consulting engagements with customers. In certain cases, we may utilize third-party subcontractors to perform professional services engagements. The majority of our professional services arrangements are billed on a time and materials basis and revenues are recognized over time based on time incurred and contractually agreed upon rates. Certain professional services and business consulting arrangements are billed on a fixed fee basis and revenues are


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typically recognized over time as the services are delivered based on time incurred. Data services and training revenues are generally recognized as the services are performed. Professional services revenues are affected primarily by our customers’ demands for implementation services, configuration, data services, training, speakers bureau logistics, and managed services in connection with our solutions. Our business consulting revenues are affected primarily by our customers’ demands for services related to a particular customer success initiative, strategic analysis, or business process change, and not a cloud software implementation.

Allocated Overhead

We accumulate certain costs such as building depreciation, office rent, utilities, and other facilities costs and allocate them across the various departments based on headcount. We refer to these costs as “allocated overhead.”


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Cost of Revenues

Cost of subscription services revenues for all of our solutions consists of expenses related to our computing infrastructure provided by third parties, including salesforce.com and Amazon Web Services, personnel related costs associated with hosting our subscription services and providing support, including our data stewards, data acquisition and third-party contractor costs related to the development of our data products, expenses associated with computer equipment and software, and allocated ~~overhead, and amortization expense associated with certain purchased intangibles related to our subscription services.~~overhead. We intend to continue to invest additional resources in our subscription services to enhance our product offerings and increase our delivery capacity. We may add or expand computing infrastructure capacity in the future, migrate to new computing infrastructure service providers, make additional investments in the availability and security of our solutions, and make continued investments in data sources.

Cost of professional services and other revenues consists primarily of employee-related expenses associated with providing these services. The cost of providing professional services is significantly higher as a percentage of the related revenues than for our subscription services due to the direct labor costs and costs of third-party subcontractors.

Operating Expenses

Research and Development. Research and development expenses consist primarily of employee-related expenses, third-party consulting fees, ~~and~~ hosted infrastructure ~~costs.~~costs, and allocated overhead. We continue to focus our research and development efforts on adding new features and applications and increasing the functionality and enhancing the ease of use of our cloud-based applications.

Sales and Marketing. Sales and marketing expenses consist primarily of employee-related expenses, sales commissions, marketing program costs, amortization expense associated with purchased intangibles related to our customer contracts, customer relationships and brand development, travel-related expenses and allocated overhead. Marketing program costs include advertising, customer events, corporate communications, brand awareness, and product marketing activities. Sales commissions are costs of obtaining new customer contracts and are capitalized and then amortized over a period of benefit that we have determined to be ~~one to~~ three years.

General and Administrative. General and administrative expenses consist of employee-related expenses for our executive, finance and accounting, legal, employee success, management information systems personnel, and other administrative employees. In addition, general and administrative expenses include fees related to third-party legal counsel, fees related to third-party accounting, tax and audit services, other corporate expenses, and allocated overhead.

Other Income, Net

Other income, net, consists primarily of transaction gains or losses on foreign currency, net of hedging costs, interest income, and amortization of premiums paid on investments.

Provision for Income Taxes

Provision for income taxes consists of federal and state income taxes in the United States and income taxes in certain foreign jurisdictions. See note 8 of the notes to our condensed consolidated financial statements.

~~New Accounting Pronouncements Adopted in Fiscal 2022~~

~~Refer to~~ ~~note 1~~ ~~of the notes to our condensed consolidated financial statements for a full description of the recent accounting pronouncements adopted during the three months ended April 30, 2021.~~


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Recent Accounting Pronouncements

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides accounting relief from the future impact of the cessation of the London Interbank Offered Rate (“LIBOR”) by, among other things, providing optional expedients to treat contract modifications resulting from such reference rate reform as a continuation of the existing contract and for hedging relationships to not be de-designated as a result of such changes provided certain criteria are met. The guidance is effective beginning on March 12, 2020, and the amendments apply prospectively through December 31, 2022. We are currently in the process of incorporating fallback language in negotiated contracts and incorporating non-LIBOR reference rate and/or fallback language in new contracts to prepare for these changes. We do not expect the adoption of ASU 2020-04 to have a material impact on our condensed consolidated financial statements.

Business Combinations

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured in accordance with Topic 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts. Under current GAAP, such assets and liabilities are recognized by the acquirer at fair value on the acquisition date. The new standard is effective for our fiscal year beginning on February 1, 2023, with early adoption permitted. We are currently evaluating the accounting, transition, and disclosure requirements of this standard.

Results of Operations

The following tables set forth selected condensed consolidated statements of operations data and such data as a percentage of total revenues for each of the periods indicated:


		Three months ended April 30,					Three months ended April 30,
		2021		2020					2022		2021

		(in thousands)				(in thousands)
Consolidated Statements of Comprehensive Income Data:	Consolidated Statements of Comprehensive Income Data:							Consolidated Statements of Comprehensive Income Data:
Revenues:	Revenues:							Revenues:
Subscription services	Subscription services	$	341,119	$	270,235			Subscription services	$	402,632	$	341,119
Professional services and other	Professional services and other	92,454		66,871				Professional services and other	102,470		92,454
Total revenues	Total revenues	433,573		337,106				Total revenues	505,102		433,573
Cost of revenues(1):	Cost of revenues(1):							Cost of revenues(1):
Cost of subscription services	Cost of subscription services	51,217		43,212				Cost of subscription services	58,953		51,217
Cost of professional services and other	Cost of professional services and other	64,919		51,668				Cost of professional services and other	80,562		64,919
Total cost of revenues	Total cost of revenues	116,136		94,880				Total cost of revenues	139,515		116,136
Gross profit	Gross profit	317,437		242,226				Gross profit	365,587		317,437
Operating expenses(1):	Operating expenses(1):							Operating expenses(1):
Research and development	Research and development	83,226		62,237				Research and development	113,475		83,226
Sales and marketing	Sales and marketing	64,610		55,755				Sales and marketing	76,115		64,610
General and administrative	General and administrative	41,155		36,669				General and administrative	48,325		41,155
Total operating expenses	Total operating expenses	188,991		154,661				Total operating expenses	237,915		188,991
Operating income	Operating income	128,446		87,565				Operating income	127,672		128,446
Other income, net	Other income, net	4,564		3,414				Other income, net	2,709		4,564
Income before income taxes	Income before income taxes	133,010		90,979				Income before income taxes	130,381		133,010
Provision for income taxes	Provision for income taxes	17,443		4,409				Provision for income taxes	30,266		17,443
Net income	Net income	$	115,567	$	86,570			Net income	$	100,115	$	115,567
(1) Includes stock-based compensation as follows:	(1) Includes stock-based compensation as follows:							(1) Includes stock-based compensation as follows:

Cost of revenues:
Cost of subscription services $ 906 $ 1,019
Cost of professional services and other 7,422 5,074
Research and development 16,837 11,401
Sales and marketing 11,555 8,192
General and administrative 11,769 11,221
Total stock-based compensation $ 48,489 $ 36,907


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Cost of revenues:
Cost of subscription services	$	1,277	$	906
Cost of professional services and other	9,990		7,422
Research and development	25,823		16,837
Sales and marketing	16,893		11,555
General and administrative	13,151		11,769
Total stock-based compensation	$	67,134	$	48,489

Revenues


		Three months ended April 30,								Three months ended April 30,
		2021			2020			% Change			2022				2021				% Change

		(dollars in thousands)							(dollars in thousands)
Revenues:	Revenues:
Subscription services	Subscription services	$	341,119		$	270,235		26%			Subscription services	$	402,632			$	341,119			18%
Professional services and other	Professional services and other	92,454			66,871			38%			Professional services and other	102,470				92,454				11%
Total revenues	Total revenues	$	433,573		$	337,106		29%			Total revenues	$	505,102			$	433,573			16%
Percentage of revenues:	Percentage of revenues:										Percentage of revenues:
Subscription services	Subscription services	79		%	80		%				Subscription services	80		%		79		%
Professional services and other	Professional services and other	21			20						Professional services and other	20				21
Total revenues	Total revenues	100		%	100		%				Total revenues	100		%		100		%

Total revenues for the three months ended April 30, ~~2021~~2022 increased ~~$96~~$72 million, of which ~~$71~~$62 million was from growth in subscription services revenues. The increase in subscription services revenues consisted of ~~$45~~$42 million of subscription services revenue attributable to ~~Veeva Vault solutions~~R&D Solutions and ~~$26~~$20 million of subscription services revenue attributable to ~~Veeva~~ Commercial ~~Cloud solutions.~~Solutions. The geographic mix of subscription services revenues was 57% from North America, 28% from Europe, and 15% from other locations, primarily Asia Pacific, for the three months ended April 30, 2022, as compared to 56% from North America, 27% from Europe, and 17% from other locations, primarily Asia Pacific, for the three months ended April 30, 2021.

Professional services and other revenues for the three months ended April 30, 2022 increased $10 million. The increase was primarily due to new customers requesting implementation and deployment related professional services and existing customers requesting professional services related to expanding deployments or the deployment of newly purchased solutions. The increased demand for professional services and the resulting increase in professional services revenues was weighted heavily towards implementation and deployments of our R&D Solutions. Demand for our Veeva Business Consulting services also contributed to the growth for the period. The geographic mix of professional services and other revenues was 65% from North America, 28% from Europe, and 7% from Asia Pacific for the three months ended April 30, 2022, as compared to 59% from North America, 33% from Europe, and 8% from Asia Pacific for the three months ended April 30, 2021.

Over time, we expect the proportion of our total revenues from professional services to decrease.

Costs and Expenses

Note that in response to unusual inflationary pressure and the demand environment for skilled employees, we increased salaries for the majority of our employees by 5% effective September 1, 2021. Further, in light of the labor market conditions and inflationary pressure, our compensation increases in connection with our annual compensation review process, which took place in our fiscal quarter ended April 30, 2022, were higher than


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~~from North America~~previous years. These compensation changes are likely to increase our employee-related expenses going forward, which impact all of the cost and ~~27% from Europe for the three months ended April 30, 2021, as compared to subscription services revenues~~expense categories discussed below.

Cost of ~~57% from North America~~Revenue and ~~26% from Europe for the three months ended April 30, 2020.~~Gross Margin

Professional services and other revenues for the three months ended April 30, 2021 increased $26 million. The increase in professional services revenues was due primarily to new customers requesting implementation and deployment-related professional services, existing customers requesting professional services related to expanding deployments or the deployment of newly purchased solutions, and increased business consulting engagements. The increased demand for professional services and the resulting increase in professional services revenues was weighted heavily towards implementation and deployments of our Veeva Vault solutions, as well as increased demand for our business consulting offering. The geographic mix of professional services and other revenues was 59% from North America and 33% from Europe for the three months ended April 30, 2021, as compared to 63% from North America and 30% from Europe for the three months ended April 30, 2020.

~~Over time, we expect the proportion of our total revenues from professional services to decrease.~~

~~Costs and Expenses~~


		Three months ended April 30,								Three months ended April 30,
		2021			2020			% Change				2022			2021			% Change

		(dollars in thousands)							(dollars in thousands)
Cost of revenues:	Cost of revenues:										Cost of revenues:
Cost of subscription services	Cost of subscription services	$	51,217		$	43,212		19%			Cost of subscription services	$	58,953		$	51,217		15%
Cost of professional services and other	Cost of professional services and other	64,919			51,668			26%			Cost of professional services and other	80,562			64,919			24%
Total cost of revenues	Total cost of revenues	$	116,136		$	94,880		22%			Total cost of revenues	$	139,515		$	116,136		20%
Gross margin percentage:	Gross margin percentage:										Gross margin percentage:
Subscription services	Subscription services	85		%	84		%				Subscription services	85		%	85		%
Professional services and other	Professional services and other	30		%	23		%				Professional services and other	21		%	30		%
Total gross margin percentage	Total gross margin percentage	73		%	72		%				Total gross margin percentage	72		%	73		%
Gross profit	Gross profit	$	317,437		$	242,226		31%			Gross profit	$	365,587		$	317,437		15%

Cost of revenues for the three months ended April 30, ~~2021~~2022 increased ~~$21~~$23 million, of which $8 million was an increase in cost of subscription services. The increase in cost of subscription services was primarily due to ~~an increase~~increases of $3 million in computing infrastructure costs, ~~the vast majority of which was for computing infrastructure provided by Amazon Web Services, and an increase of $2 million in fees paid to salesforce.com,~~ which was driven by an increase in the number of end users of our subscription ~~services. Additionally, there was an increase of~~services, $2 million in employee compensation-related costs, and $1 million in ~~costs of~~ third-party ~~contractors~~contractor costs related to the development of our data products. ~~There was also an increase of $1 million related to data acquisition costs.~~ We expect cost of subscription services to increase in absolute dollars in the near term due to increased usage of our subscription services and increased data costs related to our Veeva ~~Data Cloud~~Compass offering.

Cost of professional services and other for the three months ended April 30, ~~2021~~2022 increased ~~$13~~$16 million, primarily due to a ~~$14~~$13 million increase in employee compensation-related costs (which includes an increase of $2$3 million in stock-based compensation) that was partially offset by a $1 million decrease in costs related travel and live events due to COVID-19. The increase in employee compensation-related costs is primarily driven by the increase in headcount during the period.. We expect cost of professional services and other to increase in absolute dollars in the near term as we add personnel to our global professional services ~~organization.~~organization and Veeva Business Consulting, and as a result of compensation increases as part of our continued investment in our existing employees.

Gross margin for the three months ended April 30, 2022 and 2021 was 72% and ~~2020 was~~ 73% ~~and 72%~~, respectively. The ~~increase~~slight decrease compared to the prior period ~~is largely~~was due to lower gross margin for our professional services in the ~~growth in sales of our Veeva Vault solutions, which have higher gross margins~~quarter ended April 30, 2022, as compared to ~~our Veeva Commercial Cloud solutions.~~the same period in the prior fiscal year.

Operating Expenses and Operating Margin

Operating expenses include research and development, sales and marketing, and general and administrative expenses. As we continue to invest in our growth through hiring, we expect operating expenses and stock-based compensation to increase in absolute dollars and to slightly increase as a percentage of revenue in the future.

Research and Development


	Three months ended April 30,
	2022			2021			% Change

	(dollars in thousands)
Research and development	$	113,475		$	83,226		36%
Percentage of total revenues	22		%	19		%

Research and development expenses for the three months ended April 30, 2022 increased $30 million, primarily due to an increase of $26 million in employee compensation-related costs (which includes an increase of $9 million in stock-based compensation) and an increase of $3 million in technology infrastructure costs. The increase in employee compensation-related costs is primarily driven by the increase in headcount and total compensation during the period. The expansion of our headcount and compensation increases in research and development is to support development work for the increased number of products that we offer or may offer in the future.


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~~Research~~We expect research and ~~Development~~development expenses to increase in absolute dollars in fiscal 2023, primarily due to compensation increases as part of our investment in our existing employees, and continued investment in our product offerings.

Three months ended April 30,
2021 2020 % Change
(dollars in thousands)
Research and development $ 83,226 $ 62,237 34%
Percentage of total revenues 19 % 18 %
Sales and Marketing

~~Research~~


	Three months ended April 30,
	2022		2021		% Change

	(dollars in thousands)
Sales and marketing	76,115		64,610		18%
Percentage of total revenues	15	%	15	%

Sales and ~~development~~marketing expenses for the three months ended April 30, ~~2021~~2022 increased ~~$21~~$12 million, primarily due to an increase of ~~$21~~$11 million in employee compensation-related costs (which includes an increase of $5 million in stock-based compensation). The increase in employee compensation-related costs is primarily driven by the increase in headcount and total compensation during the period. ~~The expansion of our headcount in research and development is to support development work for the increased number of products that we offer or may offer in the future.~~

We expect research and development expenses to increase in absolute dollars and as a percentage of revenue in the future, primarily due to higher headcount as we continue to invest in our product offerings.

~~Sales and Marketing~~

Three months ended April 30,
2021 2020 % Change
(dollars in thousands)
Sales and marketing 64,610 55,755 16%
Percentage of total revenues 15 % 17 %

Sales and marketing expenses for the three months ended April 30, 2021 increased $9 million, primarily due to an increase of $12 million in employee compensation-related costs (which includes an increase of $3 million in stock-based compensation). The increase in employee compensation-related costs is primarily driven by the increase in headcount during the period. This was partially offset by a $3 million decrease in several expense categories related to COVID-19, such as marketing program spend and travel and entertainment costs.

We expect sales and marketing expenses ~~to continue~~ to grow in absolute dollars in the future, primarily due to employee-related expenses as we increase our headcount to support our sales and marketing efforts associated with our product offerings, the impact of changes to our sales compensation plans, ~~and~~ our continued expansion of our sales capacity across all our ~~solutions.~~solutions, and as a result of compensation increases as part of our continued investment in our existing employees. Additionally, we expect travel and entertainment costs to start to increase in the ~~second half of the~~ fiscal year ending January 31, ~~2022.~~2023.

General and Administrative


		Three months ended April 30,								Three months ended April 30,
		2021			2020			% Change				2022			2021			% Change

		(dollars in thousands)							(dollars in thousands)
General and administrative	General and administrative	$	41,155		$	36,669		12%			General and administrative	$	48,325		$	41,155		17%
Percentage of total revenues	Percentage of total revenues	9		%	11		%				Percentage of total revenues	10		%	9		%

General and administrative expenses for the three months ended April 30, ~~2021~~2022 increased $4$7 million, primarily due to an increase of $2$5 million in employee compensation-related costs (which includes an increase of $1 million in stock-based compensation). and an increase of $2 million in professional services. The increase in employee compensation-related costs is primarily driven by the increase in headcount and total compensation during the period.

We expect general and administrative expenses to continue to grow in absolute dollars in the future as a result of ~~employee-related expenses~~compensation increases as ~~we increase~~part of our ~~headcount,~~continued investment in our existing employees, investments in our information technology infrastructure, and third-party fees, including fees associated with on-going litigation.

Other Income, Net


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~~Table of Contents~~

Three months ended April 30,
2021 2020 % Change
(dollars in thousands)
Other income, net $ 4,564 $ 3,414 34%


	Three months ended April 30,
	2022		2021		% Change

	(dollars in thousands)
Other income, net	$	2,709	$	4,564	(41)%

Other income, net, for the three months ended April 30, ~~2021 increased $1~~2022 decreased $2 million, primarily due to $4a decrease of $2 million ~~of gains~~ in foreign ~~exchange rate activity, partially offset by a $2 million increase in investment amortization expense and a $1 million reduction in interest income.~~currency gains.

We continue to experience foreign currency fluctuations primarily due to the impact resulting from the periodic re-measurement of our foreign currency balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. Our results of operations are subject to fluctuations due to


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changes in foreign currency exchange rates, particularly changes in the Euro, Japanese Yen, Canadian Dollar, British Pound Sterling, ~~Japanese Yen~~Hungarian Forint, and Chinese Yuan. We may continue to experience favorable or adverse foreign currency impacts due to volatility in these currencies.

Provision for Income Taxes


		Three months ended April 30,								Three months ended April 30,
		2021			2020			% Change				2022			2021			% Change

		(dollars in thousands)							(dollars in thousands)
Income before income taxes	Income before income taxes	$	133,010		$	90,979		46%			Income before income taxes	$	130,381		$	133,010		(2)%
Provision for income taxes	Provision for income taxes	$	17,443		$	4,409		296%			Provision for income taxes	$	30,266		$	17,443		74%
Effective tax rate	Effective tax rate	13.1		%	4.8		%				Effective tax rate	23.2		%	13.1		%

The provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate due primarily to state taxes, tax credits, equity compensation, and foreign income subject to taxation in the United States. Future tax rates could be affected by changes in tax laws and regulations or by rulings in tax related litigation, as may be applicable. We will continue to identify and analyze other applicable changes in tax laws in the United States and abroad.

For the three months ended April 30, ~~2021~~2022 and ~~2020,~~2021, our effective tax rates were ~~13.1%~~23.2% and ~~4.8%~~13.1%, respectively. During the three months ended April 30, ~~2021~~2022 as compared to the prior year period, our effective tax rate increased primarily due to ~~the increase in income before income taxes for the period combined with~~ a ~~decrease~~reduction in excess tax benefits related to equity compensation. We recognized ~~such~~excess tax benefits in our provision for income taxes of ~~$17~~$5 million and ~~$20~~$17 million for the three months ended April 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

Non-GAAP Financial Measures

In our public disclosures, we have provided non-GAAP measures, which we define as financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. In addition to our GAAP measures, we use these non-GAAP financial measures internally for budgeting and resource allocation purposes and in analyzing our financial results.

For the reasons set forth below, we believe that excluding the following items provides information that is helpful in understanding our operating results, evaluating our future prospects, comparing our financial results across accounting periods, and comparing our financial results to our peers, many of which provide similar non-GAAP financial measures.


30			~~Veeva Systems Inc. \| Form 10-Q~~

~~Table~~•Excess tax benefits. Excess tax benefits from employee stock plans are dependent on previously agreed-upon equity grants to our employees, vesting of ~~Contents~~those grants, stock price, and exercise behavior of our employees, which can fluctuate from quarter to quarter. Because these fluctuations are not directly related to our business operations, we exclude excess tax benefits for our internal management reporting processes. Our management also finds it useful to exclude excess tax benefits when assessing the level of cash provided by operating activities. Given the nature of the excess tax benefits, we believe excluding it allows investors to make meaningful comparisons between our operating cash flows from quarter to quarter and those of other companies.

•Stock-based compensation expenses. We exclude stock-based compensation expenses primarily because they are non-cash expenses that we exclude from our internal management reporting processes. We also find it useful to exclude these expenses when we assess the appropriate level of various operating expenses and resource allocations when budgeting, planning, and forecasting future periods. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use, ~~under FASB ASC Topic 718,~~ we believe excluding stock-based compensation expenses allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies.

•Amortization of purchased intangibles. We incur amortization expense for purchased intangible assets in connection with acquisitions of certain businesses and technologies. Amortization of intangible assets is a non-cash expense and is inconsistent in amount and frequency because it is significantly affected


30			Veeva Systems Inc. \| Form 10-Q

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by the timing, size of acquisitions, and the inherent subjective nature of purchase price allocations. Because these costs have already been incurred and cannot be recovered, and are non-cash expenses, we exclude these expenses for internal management reporting processes. We also find it useful to exclude these charges when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning, and forecasting future periods. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well.

•Income tax effects on the difference between GAAP and non-GAAP costs and expenses. The income tax effects that are excluded relate to the imputed tax impact on the difference between GAAP and non-GAAP costs and expenses due to stock-based compensation and purchased intangibles for GAAP and non-GAAP measures.

Limitations on the Use of Non-GAAP Financial Measures

There are limitations to using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures provided by other companies.

The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which items are adjusted to calculate our non-GAAP financial measures. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis and also by providing GAAP measures in our public disclosures.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure to evaluate our business, and to view our non-GAAP financial measures in conjunction with the most directly comparable GAAP financial measures.


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~~Table of Contents~~

The following table reconciles the specific items excluded from GAAP metrics in the calculation of non-GAAP metrics for the periods shown below:


		Three months ended April 30,				Three months ended April 30,
		2021		2020				2022		2021

								(in thousands)
Net cash provided by operating activities on a GAAP basis							Net cash provided by operating activities on a GAAP basis	481,027		478,385
Excess tax benefits from employee stock plans							Excess tax benefits from employee stock plans	(4,907)		(17,451)
Net cash provided by operating activities on a non-GAAP basis							Net cash provided by operating activities on a non-GAAP basis	$	476,120	$	460,934
		(in thousands)
Operating income on a GAAP basis	Operating income on a GAAP basis	$	128,446	$	87,565		Operating income on a GAAP basis	$	127,672	$	128,446
Stock-based compensation expense	Stock-based compensation expense	48,489		36,907			Stock-based compensation expense	67,134		48,489
Amortization of purchased intangibles	Amortization of purchased intangibles	4,429		5,215			Amortization of purchased intangibles	4,746		4,429
Operating income on a non-GAAP basis	Operating income on a non-GAAP basis	$	181,364	$	129,687		Operating income on a non-GAAP basis	$	199,552	$	181,364
Net income on a GAAP basis	Net income on a GAAP basis	$	115,567	$	86,570		Net income on a GAAP basis	$	100,115	$	115,567
Stock-based compensation expense	Stock-based compensation expense	48,489		36,907			Stock-based compensation expense	67,134		48,489
Amortization of purchased intangibles	Amortization of purchased intangibles	4,429		5,215			Amortization of purchased intangibles	4,746		4,429
Income tax effect on non-GAAP adjustments(1)	Income tax effect on non-GAAP adjustments(1)	(21,602)		(23,542)			Income tax effect on non-GAAP adjustments(1)	(12,209)		(21,602)
Net income on a non-GAAP basis	Net income on a non-GAAP basis	$	146,883	$	105,150		Net income on a non-GAAP basis	$	159,786	$	146,883
Diluted net income per share on a GAAP basis	Diluted net income per share on a GAAP basis	$	0.71	$	0.54		Diluted net income per share on a GAAP basis	$	0.62	$	0.71
Stock-based compensation expense	Stock-based compensation expense	0.30		0.23			Stock-based compensation expense	0.41		0.30
Amortization of purchased intangibles	Amortization of purchased intangibles	0.03		0.04			Amortization of purchased intangibles	0.03		0.03
Income tax effect on non-GAAP adjustments(1)	Income tax effect on non-GAAP adjustments(1)	(0.13)		(0.15)			Income tax effect on non-GAAP adjustments(1)	(0.07)		(0.13)
Diluted net income per share on a non-GAAP basis	Diluted net income per share on a non-GAAP basis	$	0.91	$	0.66		Diluted net income per share on a non-GAAP basis	$	0.99	$	0.91
(1) For the three months ended April 30, 2021 and 2020, we used an estimated annual effective non-GAAP tax rate of 21%
(1) For the three months ended April 30, 2022 and 2021, we used an estimated annual effective non-GAAP tax rate of 21%.							(1) For the three months ended April 30, 2022 and 2021, we used an estimated annual effective non-GAAP tax rate of 21%.


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Liquidity and Capital Resources


		Three months ended April 30,					Three months ended April 30,
		2021		2020					2022		2021

		(in thousands)				(in thousands)
Net cash provided by operating activities	Net cash provided by operating activities	$	478,385	$	282,172			Net cash provided by operating activities	$	481,027	$	478,385
Net cash used in investing activities	Net cash used in investing activities	(37,949)		(48,209)				Net cash used in investing activities	(378,487)		(37,949)
Net cash provided by financing activities	Net cash provided by financing activities	16,805		9,533				Net cash provided by financing activities	1,292		16,805
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(2,765)		548				Effect of exchange rate changes on cash and cash equivalents	(1,874)		(2,765)
Net change in cash and cash equivalents	Net change in cash and cash equivalents	$	454,476	$	244,044			Net change in cash and cash equivalents	$	101,958	$	454,476

Our principal sources of liquidity continue to be comprised of our cash, cash equivalents, and short-term investments, as well as cash flows generated from our operations. As of April 30, ~~2021,~~2022, our cash, cash equivalents, and short-term investments totaled ~~$2.2~~$2.8 billion, of which ~~$48~~$68 million represented cash and cash equivalents held outside of the United States.

Our ~~remaining~~primary use of cash is payment of our operating costs, which consist primarily of employee-related expenses, such as compensation and benefits, investments in our information technology infrastructure, and general operating expenses for marketing, facilities, and overhead costs. Long-term cash requirements for items other than normal operating expenses could include the following: the acquisition of businesses, software products, or technologies complementary to our business; and capital expenditures, including the purchase and implementation of internal-use software applications.

Our non-U.S. cash and cash equivalents have been earmarked for indefinite reinvestment in our operations outside the United States, ~~thus no U.S. current or deferred~~except in certain designated jurisdictions that have an immaterial impact to our financial statements. As of April 30, 2022, we have not recorded any taxes, ~~have been accrued.~~such as withholding taxes, associated with the foreign earnings that are indefinitely reinvested outside of the United States. We believe our U.S. sources of cash and liquidity are sufficient to meet our business needs in the United States and do not expect that we will need to repatriate additional funds we have designated as indefinitely reinvested outside the United States. Under currently enacted tax laws, should our plans change and we were to choose to repatriate some or all of the funds we have designated as indefinitely reinvested outside the United States, such amounts may be subject to certain jurisdictional taxes.


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We have financed our operations primarily through cash generated from operations. We believe our existing cash, cash equivalents, and short-term investments generated from operations will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months. Our future capital requirements will depend on many factors including our growth rate, subscription renewal activity, the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the ongoing investments in technology infrastructure, the introduction of new and enhanced solutions, and the continuing market acceptance of our solutions. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, and intellectual property rights. We may be required to seek additional equity or debt financing for those arrangements or for other reasons. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition would be adversely affected.

Cash Flows from Operating Activities

Our largest source of operating cash inflows is cash collections from our customers for subscription services. We also generate significant cash flows from our professional services arrangements. The first quarter of our fiscal year is seasonally the strongest quarter for cash inflows due to the timing of our annual subscription billings and related collections. Our primary uses of cash from operating activities are for employee-related expenditures, expenses related to our computing infrastructure (including salesforce.com and Amazon Web Services), building infrastructure costs (including leases for office space), fees for third-party legal counsel and accounting services, and ~~marketing program~~data acquisition costs. Note that our net income reflects the impact of excess tax benefits related to equity compensation.

Net cash provided by operating activities was ~~$478~~$481 million for the three months ended April 30, ~~2021~~2022 compared to ~~$282~~$478 million provided by operating activities for the three months ended April 30, ~~2020.~~2021. The ~~$196~~$3 million increase was


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primarily due to increased sales and the related cash collections. These increases were partially offset by larger operating expenses due to increases in headcount.

The cash flows from operating activities for the three months ended April 30, 2022 represent a significant portion of the cash flows from operating activities that we expect during our fiscal year ending January 31, 2023. As a result, we expect cash flows from operating activities to be substantially less in future quarterly periods during this fiscal year.

Our future cash flows from operating activities may be materially impacted as a result of the Tax Cuts and Jobs Act of 2017. The Tax Cuts and Jobs Act of 2017 eliminates the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years. Although Congress is considering legislation that would defer the requirement to later years, we have no assurance that the provision will be so deferred, repealed or otherwise modified. If the requirement is not modified, it will materially reduce our cash flows beginning in the second quarter of fiscal 2023.

Cash Flows from Investing Activities

The cash flows from investing activities primarily relate to cash used for the purchase of marketable securities, net of maturities. We also use cash to invest in capital assets to support our growth.

Net cash used in investing activities was ~~$38~~$378 million for the three months ended April 30, ~~2021~~2022 compared to ~~$48~~$38 million used in investment activities for the three months ended April 30, ~~2020.~~2021. The ~~$10~~$341 million ~~decrease~~increase in cash used in investing activities was mainly due to the ~~decrease~~net increase in ~~net~~ purchases of investments.

Cash Flows from Financing Activities

The cash flows from financing activities relate primarily to stock option ~~exercises.~~exercises and taxes paid on behalf of employees related to the net share settlement of RSUs. In June 2021, we began funding withholding taxes due on employee RSU awards by net share settlement, rather than our previous approach of requiring employees to either sell shares of our Class A common stock or pay the withholding taxes in cash to cover taxes due upon vesting of such awards.

Net cash provided by financing activities was ~~$17~~$1 million for the three months ended April 30, ~~2021~~2022 compared to ~~$10~~$17 million provided by financing activities for the three months ended April 30, ~~2020. The $7~~2021.The $16 million ~~increase in cash provided by financing activities~~decrease is primarily related to ~~an increase in proceeds from~~$15 million of cash used to pay employee ~~stock option exercises resulting from a higher aggregate average exercise price during~~taxes related to the ~~period.~~


~~Veeva Systems Inc. \| Form 10-Q~~			33

~~Table~~net share settlement of ~~Contents~~

~~Commitments~~

Our principal commitments consist of obligations for minimum payment commitments to salesforce.com, and leases for office space and data centers. On March 3, 2014, we amended our agreement with 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 commitment of $250 million and have a remaining purchase commitment of $35 million, as of April 30, 2021, that must be made by September 1, 2025.~~

~~As of April 30, 2021, the future non-cancelable minimum payments under these commitments were as follows:~~

Payments due by period
Total Less than 1 year 1-3
Years 3-5
Years More than
5 years
(in thousands)
Salesforce.com commitments $ 35,390 7,380 — 28,010 —
Operating lease obligations 68,057 9,632 22,051 14,768 21,606
Finance lease obligations 96 96 — — —
Total $ 103,543 $ 17,108 $ 22,051 $ 42,778 $ 21,606

The amounts in the table above are associated with agreements that are enforceable and legally binding, which specify significant terms including payment terms, related services, and the approximate timing of the transaction. Obligations under agreements that we can cancel without a significant penalty are not included in the table.

~~Off-Balance Sheet Arrangements~~

We do not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.RSUs.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (GAAP). In the preparation of these condensed consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs, and expenses and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates during the three months ended April 30, ~~2021~~2022 as compared to the those disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2021.~~2022.


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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Foreign currency exchange risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, Japanese Yen, Canadian Dollar, British Pound Sterling, ~~Euro, Japanese Yen,~~Hungarian Forint, and Chinese Yuan, and may be adversely affected in the future due to changes in foreign currency exchange rates. We continue to experience foreign currency fluctuations primarily due to the periodic re-measurement of our foreign currency monetary account balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. ChangesFor example, changes in exchange rates ~~may~~ negatively ~~affect~~affected our revenues ~~and other operating results~~ as expressed in U.S. ~~dollars. For~~dollars for the ~~three months~~quarter ended April 30, ~~2021~~2022, and ~~2020,~~ we ~~had foreign currency gains of $2 million and losses of $1 million, respectively.~~expect our revenues as expressed in U.S. dollars to be negatively affected by changes in exchange rates for our fiscal year ending January 31, 2023 as well.

We have experienced and will continue to experience foreign currency fluctuations in our net income ~~as a result~~primarily due to the periodic re-measurement of ~~gains or losses related to revaluing certain current asset and current liability~~monetary account balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. We engage in the hedging of our foreign currency transactions as described in note 7 of the notes to our condensed consolidated financial statements and may, in the future, hedge selected significant transactions or net monetary exposure positions denominated in currencies other than the U.S. dollar. Realized and unrealized foreign currency gains, primarily resulting from foreign currency hedges offset by the re-measurement of monetary account balances, were immaterial for the three months ended April 30, 2022 and $2 million for the three months ended April 30, 2021.

Interest rate sensitivity

We had cash, cash equivalents and short-term investments totaling ~~$2.2~~$2.8 billion as of April 30, ~~2021.~~2022. This amount was held primarily in demand deposit accounts, money market funds, U.S. treasury securities and agency obligations, corporate notes and bonds, asset-backed securities, commercial paper, foreign government bonds, and agency mortgage-backed securities. The cash and cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes.

Our cash equivalents and our portfolio of marketable securities are subject to market risk due to changes in interest rates, which could affect our results of operations. Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fluctuate due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we classify our marketable securities as “available for sale,” no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary. Our fixed-income portfolio is subject to interest rate risk.

An immediate increase of 100-basis points in interest rates would have resulted in a ~~$11~~$15 million market value reduction in our investment portfolio as of April 30, ~~2021.~~2022. An immediate decrease of 100-basis points in interest rates would have increased the market value by $4$15 million as of April 30, ~~2021.~~2022. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur. Fluctuations in the value of our investment securities caused by a change in interest rates (gains or losses on the carrying value) are recorded in other comprehensive income, and are realized only if we sell the underlying securities.


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ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of April 30, ~~2021.~~2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s (SEC) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Based on our management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of April 30, ~~2021,~~2022, our disclosure controls and procedures were designed at a reasonable assurance level and were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fiscal quarter ended April 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been or would be detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.


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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may be involved in legal proceedings and subject to claims incident to the ordinary course of business. For information regarding certain current legal proceedings, see note 13 of the notes to our condensed consolidated financial statements, which is incorporated herein by reference. In addition to the legal proceedings referenced in note 13, we are involved in the following additional legal proceedings which may be material to our business.

California Non-Compete Matter.

On July 17, 2017, we filed a complaint in the Superior Court of the State of California in the County of Alameda against Medidata, IQVIA, and Sparta Systems, Inc. (Veeva Systems Inc. v. Medidata Solutions, Inc., Quintiles IMS Incorporated, IMS Software Services, LTD., and Sparta Systems, Inc., Case No. RG17868081). Our lawsuit seeks declaratory and injunctive relief concerning the use of non-compete, confidentiality, and non-disparagement agreements by these companies. Since the original complaint was filed, there has been extensive motion practice. Among other things, Medidata and Sparta ~~have~~ appealed the superior court’s decisions finding that the case may proceed as to some causes of action, and Veeva cross-appealed the superior court’s ruling that certain causes of action were barred under California law. On March 10, 2022, the California Court of Appeal affirmed the decision of the superior court, ruling that certain of Veeva's claims may proceed and certain of its claims may not. This decision is now final and none of the Parties has ~~cross-appealed. The court has not ruled on these appeals.~~sought its review.

On October 31, 2019, as to Veeva's claims against IQVIA, the trial court's earlier dismissal was reversed by the court of appeals and the case was reassigned to a new trial court judge. On February 26, 2020, IQVIA answered our complaint. Discovery is proceeding. With the ruling from the California Court of Appeals on the Sparta and Medidata appeals final, the case as to all three defendants is back before the same trial court judge.

Although the results of 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.


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ITEM 1A. RISK FACTORS.

Investing in our Class A common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” together with all of the other information in this report, including our condensed consolidated financial statements and related notes, before investing in our Class A common stock. The risks and uncertainties described below are not the only ones we face. If any of the following risks actually occurs, our business, financial condition, results of operations, and prospects could be materially and adversely affected. In that event, the price of our Class A common stock could decline and you could lose part or all of your investment.

Summary of Risk Factors

The below is a summary of principal risks to our business and risks associated with ownership of our stock. It is only a summary. You should read the more detailed discussion of risks set forth below and elsewhere in this report for a more complete discussion of the risks listed below and other risks.

•If our security measures are breached or unauthorized access to customer data is otherwise obtained, our solutions may be perceived as not being secure, customers may reduce or stop the use of our solutions, and we may incur significant liabilities.

•The markets in which we participate are highly competitive, and if we do not compete effectively, our business and operating results could be adversely affected.

•If our newer solutions are not successfully adopted by new and existing customers, the growth rate of our revenues and operating results will be adversely affected.

•We expect our revenue growth rates to decline in future periods and, as our costs increase, we may not be able to sustain the same level of profitability we have achieved in the past.

•Difficulty attracting and retaining highly skilled employees could adversely affect our business and efforts to attract and retain such employees may increase our expenses.

•Our revenues are relatively concentrated within a small number of key customers, and the loss of one or more of such key customers could cause our revenues to decline.

•Nearly all of our revenues are generated by sales to customers in the life sciences industry, and factors that adversely affect this industry could also adversely affect us.

•~~The worldwide outbreak~~Unique and uncertain macroeconomic and geopolitical factors, including as a result of the Russian invasion of Ukraine, continuing ~~impact~~uncertainty surrounding the effects of COVID-19 and inflationary pressures, may cause instability and volatility in the global financial markets and disruptions within the life sciences industry that may negatively impact our business and our stock price.

•If the third-party providers of healthcare professional and healthcare organization data and prescription drug sales data, like IQVIA for instance, do not allow our customers to upload and use such data in our solutions, the demand for our solutions may decrease, and our business may be negatively impacted.

•We rely on third-party providers for computing infrastructure, secure network connectivity, and other technology-related services needed to deliver our cloud solutions, and any disruption in the services provided by them could adversely affect our business and subject us to liability.

•Because key and substantial portions of our multichannel CRM applications are built on salesforce.com’s Salesforce Platform, we are dependent upon salesforce.com to provide these solutions to our customers and we are bound by the restrictions of our agreement with salesforce.com, which limits the markets to which we may sell our Veeva CRM solution.

•We are currently being sued by third parties for alleged misappropriation of trade secrets. We may suffer damages, which could be significant, or other harm from these lawsuits and we may be sued for infringement or misappropriation of third-party intellectual property in the future.

•Our conversion to a PBC may not result in the benefits that we anticipate, requires our directors to balance the interest of stockholders with other interests, and may subject us to legal uncertainty and other risks.


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•Until its expiration on October 15, 2023, the dual-class structure of our common stock has the effect of concentrating voting control with certain individuals and their affiliates, which will limit or preclude the ability of our investors to influence corporate matters.


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Risks Related to Our Business

If our security measures are breached or compromised or unauthorized access to customer data is otherwise obtained, our solutions may be perceived as not being secure, customers may reduce or stop their use of our solutions, and we may incur significant liabilities.

Our solutions involve the storage and transmission of our customers’ proprietary information (including personal or identifying information regarding their employees and the medical professionals whom their sales personnel contact, and sensitive proprietary data related to the clinical trial, regulatory submission and sales and marketing processes for medical treatments), personal information of medical professionals, personal information (which may include personal health information) of patients and clinical trial participants, and other sensitive information. For example, Veeva Crossix processes third-party health and non-health data for U.S. patients. Additionally, we maintain and process other confidential, proprietary, and sensitive business information, including personal information relating to our employees and contractors and confidential information relating to our solutions and business. Unauthorized access or other security breaches or incidents, as a result of third-party action (e.g., ~~cyber-attacks)~~cyber-attacks, or the introduction into our networks or systems of ransomware or other malware), employee or contractor error or malfeasance, product defect, ~~malfeasance,~~ or otherwise, could result in the loss of information, inappropriate ~~use of or~~ access to or use, unavailability, modification, destruction, or other processing of information, loss of intellectual property, service interruption, service degradation, outages, service level credits, claims, demands, litigation, regulatory investigations and other proceedings, indemnity obligations, damage to our reputation, and other liability. ~~We believe~~It is possible that our risk of cyber-attack and other sources of security breaches and incidents may be elevated ~~during the COVID-19 outbreak~~as a result of Russia’s invasion of Ukraine due to an increase in cyber-attack attempts on ~~U.S. businesses generally.~~us, our customers, our partners, or our technology infrastructure providers. While we maintain and continue to improve our security measures, we may be unable to adequately anticipate security threats or to implement adequate preventative measures, in part, because the techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target. Moreover, ~~the detection, prevention,~~our efforts to detect, prevent, and ~~remediation of~~remediate known or unknown ~~securities~~security vulnerabilities, including those arising from third-party hardware or software in our supply chain, may be insufficient to prevent security breaches or incidents resulting from such vulnerabilities, and may result in additional direct or indirect costs and liabilities and time of management ~~time.~~and technical personnel. We may be required to expend significant capital and financial resources to protect against the foregoing threats and to alleviate problems caused by actual or perceived security breaches or incidents. Additionally, we and our service providers may face difficulties or delays in identifying, remediating, and otherwise responding to any cybersecurity attack or other security breach or incident. Any or all of these circumstances or issues, or the perception that any of them have occurred or are present (including any actual or perceived cyberattacks or other security breaches or incidents), could adversely affect our ability to attract new customers, cause existing customers to elect to not renew their subscriptions, result in reputational damage and harm to our market position, or subject us to third-party claims, demands, and lawsuits, regulatory investigations, proceedings, fines, and penalties, mandatory notifications and disclosures, or other action or liability, which could adversely affect our operating ~~results.~~results and financial condition. Our insurance may not be adequate to cover losses associated with such events, and such insurance may not cover all of the types of costs, expenses, and losses we could incur to respond to and remediate a security ~~breach. A security~~ breach ~~of another significant provider of cloud-based solutions may also negatively impact the demand for our solutions.~~or incident.

The markets in which we participate are highly competitive, and if we do not compete effectively, our business and operating results could be adversely affected.

The markets for our solutions are highly competitive. In new sales cycles within our largest product categories, we generally compete with other cloud-based solutions from providers that make applications geared toward the life sciences industry. The principal such competitor for our ~~Veeva~~ Commercial ~~Cloud applications~~Solutions is IQVIA Holdings Inc., which offers a CRM application built on the Salesforce1 Platform, various data products, and other applications. For example, in 2020, a significant Veeva CRM customer launched a project to implement IQVIA’s competitive software offering for portions of its CRM users. The scope of that deployment may expand, resulting in further losses of revenue within our Veeva CRM business, or we may lose additional Veeva CRM users or customers in the future. Our data and data analytics products, including Veeva OpenData, Veeva Link, Veeva Crossix, and Veeva ~~Data Cloud,~~Compass, compete with IQVIA, Ipsos Group S.A., Definitive Health Corp., and smaller data and data analytics providers. ~~No single vendor offers products that compete with all of our Veeva Vault applications, but~~ IQVIA, Dassault Systèmes (through its Medidata business line), OpenText Corporation, Oracle Corporation, Honeywell International Inc., and other smaller application providers offer applications that compete with certain of our Veeva ~~Vault~~R&D applications. Our Veeva Commercial Cloud and Veeva ~~Vault application suites~~R&D applications also compete to replace client server-based legacy solutions offered by companies such as Oracle, Microsoft Corporation, and other smaller application


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providers. Our customers may also choose to use cloud-based applications or platforms that are not life sciences specific—such as Box.com, Amazon Web Services, or Microsoft—for certain of the functions our applications provide. Our business consulting and professional services offerings compete with a range of professional services firms, including, at times, some of our partners. With the introduction of new technologies, we expect competition to intensify in the future, and we may face competition from new market entrants as well.

Some of our actual and potential competitors have advantages over us, such as longer operating histories, significantly greater financial, technical, marketing or other resources, stronger brand and business recognition, larger intellectual property portfolios, and agreements with a broader set of system integrators and other partners. We also continue to be subject to litigation from our competitors. For example, as disclosed elsewhere in this report, we are in active litigation with IQVIA and Medidata.


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If our competitors’ products, services, or technologies become more accepted than our solutions, if they are successful in bringing their products or services to market earlier than we are, if their products or services are more technologically capable than ours, or if customers replace our solutions with custom-built software, then our revenues could be adversely affected. Pricing pressures and increased competition could result in reduced sales, reduced margins, losses, or a failure to maintain or improve our competitive market position, any of which could adversely affect our business. For all of these reasons, we may not be able to compete favorably against our current and future competitors.

If our newer solutions are not successfully adopted by new and existing customers, the growth rate of our revenues and operating results will be adversely affected.

Our continued growth and profitability will depend on our ability to successfully develop and sell new solutions. It is uncertain whether these newer solutions will continue to grow as a percentage of revenues at a pace significant enough to support our expected overall growth. For example, we have limited experience selling our Veeva ~~Data Cloud~~Compass offering for longitudinal patient data, and our MyVeeva for Patients solution that will enable remote patient interactions for clinical ~~trials, or our MyVeeva for Doctors solution that will facilitate more efficient communications between health care professionals and life sciences companies.~~trials. We cannot be certain that we will be successful with respect to newer solutions and markets. It may take us significant time, and we may incur significant expense, to effectively market and sell these solutions, develop other new solutions, or make enhancements to our existing solutions. If our newer solutions do not continue to gain traction in the market, or other solutions that we may develop and introduce in the future do not achieve market acceptance in a timely manner, the growth rate of our revenues and operating results will be adversely affected.

Difficulty attracting and retaining highly skilled employees could adversely affect our business and efforts to attract and retain such employees may increase our expenses.

To execute our growth plan, we must attract and retain highly skilled employees. Competition for such employees and potential employees is intense. We have experienced, and expect to continue to experience, difficulty in hiring and retaining employees with the appropriate level of qualifications, and we also have experienced, and expect to continue to experience, intense recruitment of our employees by competitors and other technology companies. These factors have been exacerbated by a general labor market shortage. We believe our customers have faced similar challenges. Staffing difficulties resulting from these labor market factors can negatively impact the timing of projects and the ability to staff projects.

Further, it takes time for newly hired employees to become productive. With respect to sales professionals, for instance, even if we are successful in attracting highly qualified personnel, it may take six to nine months or longer before they are fully trained and productive.

Many of the companies with which we compete for experienced employees have greater resources than we have and may offer compensation packages that are perceived to be better than ours. For example, we offer equity awards to a substantial majority of our job candidates and existing employees as part of their overall compensation package. If the perceived value of our equity awards declines, including as a result of declines in the market price of our Class A common stock or changes in perception about our future prospects, it may adversely affect our ability to recruit and retain highly skilled employees. Additionally, changes in our compensation structure may be negatively received by employees and result in attrition or cause difficulty in the recruiting process. If we fail to attract new employees or fail to retain and motivate our current employees, our business and future growth prospects could be adversely affected.

In response to unusual inflationary pressure and the demand environment for skilled employees, we increased salaries for the majority of our employees by 5% effective September 1, 2021. Further, in light of the labor market


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conditions and inflationary pressure discussed above, our compensation increases in connection with our annual compensation review process, which took place in our fiscal quarter ended April 30, 2022, were higher than previous years. These compensation changes are likely to increase our expenses.

Our revenues are relatively concentrated within a small number of key customers, and the loss of one or more of such key customers, or their failure to renew or expand user subscriptions, could slow the growth rate of our revenues or cause our revenues to decline.

In our fiscal years ended January 31, 2022, 2021, ~~2020,~~ and ~~2019,~~2020, our top 10 customers accounted for ~~36%~~31%, 36%, and ~~39%~~36%, of our total revenues, respectively. We rely on our reputation and recommendations from key customers in order to promote our solutions to potential customers, which we call “reference selling.” The loss of any of our key customers, or a failure of one or more of them to renew or expand user subscriptions for some or all our products, could have a significant impact on the growth rate of our revenues, our reputation, and our ability to obtain new customers. In the event of an acquisition of one of our customers or a business combination between two of our customers, we have in the past and may in the future suffer reductions in user subscriptions or non-renewal of certain or all of their subscription orders. We are also likely to face increasing purchasing scrutiny at the renewal of large customer subscription orders, which may result in reductions in user subscriptions or increased pricing pressure. The business impact of any of these negative events could be particularly pronounced with respect to our largest customers.

~~An inability to attract and retain highly skilled employees could adversely affect our business.~~

To execute our growth plan, we must attract and retain highly skilled employees. Competition for these employees is intense, especially with respect to software engineers with high levels of experience in enterprise software and internet-related services and sales personnel. We have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with the appropriate level of qualifications, and we have experienced, and we expect to continue to experience, intense recruitment of our employees by competitors and other technology companies. With respect to sales professionals, even if we are successful in attracting highly qualified personnel, it may take six to nine months or longer before they are fully trained and productive. Many of the companies with which we compete for experienced employees have greater resources than we have and may offer compensation packages that are perceived to be better than ours. For example, we offer equity awards to a substantial majority of our job candidates and existing employees as part of their overall compensation package. If the perceived value of our equity awards declines, including as a result of declines in the market price of our Class A common stock or changes in perception about our future prospects, it may adversely affect our ability to recruit and retain highly skilled employees. Additionally, changes in our compensation structure may be negatively received by employees and result in attrition or cause difficulty in the recruiting process. If we fail to attract new employees or fail to retain and motivate our current employees, our business and future growth prospects could be adversely affected.


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Defects or disruptions in our solutions could result in diminished demand for our solutions, a reduction in our revenues, and subject us to substantial liability.

We have from time to time found defects in our solutions, and new defects may be detected in the future. In addition, we have experienced, and may in the future experience, service disruptions, degradations, outages, and other performance problems. These types of problems may be caused by a variety of factors, including human or software errors, viruses, cyber-attacks, fraud, spikes in customer usage, problems associated with our third-party computing infrastructure and network providers, infrastructure changes, and denial of service issues. Service disruptions may result from errors we make in delivering, configuring, or hosting our solutions, or designing, installing, expanding, or maintaining our computing infrastructure. In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time. It is also possible that such problems could result in losses of customer data.

Since our customers use our solutions for important aspects of their business, any errors, defects, disruptions, service degradations, or other performance problems with our solutions, could hurt our reputation and may damage our customers’ businesses. If that occurs, our customers may delay or withhold payment to us, cancel their agreements with us, elect not to renew, or make service credit claims, warranty claims, or other claims against us, and we could lose future sales. The occurrence of any of these events could result in diminishing demand for our solutions, a reduction of our revenues, an increase in our bad debt expense or in collection cycles for accounts receivable, or could require us to incur the expense of litigation or substantial liability.

We have experienced rapid growth, and if we fail to manage our growth effectively, we may be unable to execute our business plan.

We have experienced rapid growth and expansion of our operations. Our revenues, customer count, product and service offerings, countries of operation, facilities, and computing infrastructure needs have all increased significantly, and we expect them to increase in the future. We have also experienced rapid growth in our employee base. As we continue to grow, both organically and through acquisitions, we must effectively integrate, develop, and ~~motivate~~manage an increasing number of employees, ~~(an~~including an increasing ~~portion~~number of ~~whom are permanent remote employees),~~employees who, pursuant to our “Work Anywhere” policy, do not work from a Veeva office. We may find it challenging to maintain the same level of employee productivity while executing our growth plan, fostering collaboration, and maintaining the beneficial aspects of our ~~culture. Any failure to preserve our~~ culture, and any such failures could negatively affect our future success, including our ability to attract and retain highly qualified employees and to achieve our business objectives.

Our rapid growth has placed, and will continue to place, a significant strain on our management capabilities, administrative and operational infrastructure, facilities, IT, and other resources. We anticipate that additional investments in our computing infrastructure and facilities will be required to scale our operations. To effectively manage growth, we must continue to improve our key business applications, processes, and computing infrastructure; enhance information and communication systems; and ensure that our policies and procedures evolve to reflect our current operations and are appropriately communicated to and observed by employees. These


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enhancements and improvements will require additional investments and allocation of valuable time, effort, and expense. Failure to effectively manage growth could result in difficulty or delays in deploying our solutions, declines in quality or customer satisfaction, increases in costs, difficulties in introducing new features or other operational difficulties, and any of these difficulties could adversely impact our business performance and results of operations.

The ~~worldwide outbreak~~continuing impact of COVID-19 may negatively impact our business and our stock price.


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were negatively impacted by COVID-19 in our fiscal year ended January 31, 2021 and that may continue for the foreseeable future. We may also experience requests from customers for lengthened payment terms or less favorable billing terms that could adversely impact our financial performance. Such requests to date have not been significant but may increase in the future. Due to our subscription-based business model, the effect of COVID-19, and any impact to our sales efforts, may not be fully reflected in our results of operations until future periods, if at all.

In addition, the stock market has been unusually volatile during certain periods of the COVID-19 pandemic and such volatility may continue. During certain periods of the COVID-19 pandemic, our stock price has declined significantly, and such declines may happen again.

We may acquire other companies or technologies, which could divert our management’s attention, result in additional dilution to our stockholders, and otherwise disrupt our operations and adversely affect our operating results.

We have in the past acquired and may in the future seek to acquire or invest in businesses, solutions, or technologies that we believe could complement or expand our solutions, enhance our technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are completed.

We have limited experience in acquiring other businesses. We may not be able to successfully integrate the acquired personnel, operations, and technologies or effectively manage the combined business following the acquisition. We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including:

•inability to integrate or benefit from acquired technologies or services in a profitable manner;

•costs, liabilities, or accounting charges associated with the acquisition;

•difficulty integrating the privacy, data security, and accounting systems, operations, and personnel of the acquired business;


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•difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business;

•difficulty converting the customers of the acquired business onto our solutions and contract terms, including due to disparities in the revenue, licensing, support, or professional services model of the acquired company;

•diversion of management’s attention from other business concerns;

•problems arising from differences in applicable accounting standards or practices of the acquired business (for instance, non-U.S. businesses may not be accustomed to preparing their financial statements in accordance with U.S. GAAP) or difficulty identifying and correcting deficiencies in the internal controls over financial reporting of the acquired business;

•adverse effects to business relationships with our existing business partners and customers as a result of the acquisition;


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•difficulty in retaining key personnel of the acquired business;

•use of substantial portions of our available cash to consummate the acquisition;

•use of resources that are needed in other parts of our business;

•significant changes beyond our control to the worldwide economic environment that could negatively impact our underlying assumptions and expectations for performance of the acquired ~~business, including, for example, the effect of COVID-19 on the Crossix and Physicians World businesses;~~business; and

•the possibility of investigation by, or the failure to obtain required approvals from, governmental authorities on a timely basis, if at all, under various regulatory schemes, including competition laws, which could, among other things, delay or prevent us from completing a transaction, subject the transaction to divestiture after the fact, or otherwise restrict our ability to realize the expected financial or strategic goals of the acquisition.

Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results. In addition, if an acquired business fails to meet our expectations, our operating results, business, and financial position may suffer.

Moreover, a significant portion of the purchase price of companies we acquire may be allocated to acquired intangible assets and goodwill, which we must assess for impairment at least annually. In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating results based on this impairment assessment process, which could adversely affect our results of operations. Acquisitions may also result in purchase accounting adjustments, write-offs or restructuring charges, which may negatively affect our results.

Our sales cycles can be long and unpredictable, and our sales efforts require considerable investment of resources. If our sales cycle lengthens or we invest substantial resources pursuing unsuccessful sales opportunities, our operating results and growth would be harmed.

Our sales process entails planning discussions with prospective customers, analyzing their existing solutions, and identifying how these potential customers could use and benefit from our solutions. The sales cycle for a new customer, from the time of prospect qualification to the completion of the first sale, may span 12 months or longer. Sales cycles for our newer applications or in newer markets or industries are also lengthy and difficult to predict. We spend substantial time, effort, and expense in our sales efforts without any assurance that our efforts will result in the sale of our solutions. In addition, our sales cycle can vary substantially from customer to customer because of various factors, including the discretionary nature of potential customers’ purchasing and budget decisions, the announcement or planned introduction of new solutions by us or our competitors, and the purchasing approval processes of potential customers. If our sales cycle lengthens or we invest substantial resources pursuing unsuccessful sales opportunities, our operating results and growth would be harmed.

Catastrophic events could disrupt our business and adversely affect our operating results.

Our corporate headquarters are located in Pleasanton, California and our primary third-party hosted computing infrastructure is located in the United States, the European Union, Japan, and South Korea. The west coast of the United States, Japan, and South Korea each contain active earthquake zones. Additionally, we rely on our network and third-party infrastructure and enterprise applications, internal technology systems, and our website, for our


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development, marketing, operational support, hosted services, and sales activities. In the event of a major earthquake, hurricane, actual or threatened public health emergency (e.g., COVID-19), or other catastrophic event such as fire, power loss, telecommunications failure, cyber-attack, war (including the recent Russian invasion of Ukraine), or terrorist attack, we may be unable to continue our operations at full capacity or at all and may experience system interruptions, reputational harm, delays in our solution development, lengthy interruptions in our services, breaches of data security, loss of key employees, and loss of critical data, all of which could have an adverse effect on our future operating results.

~~Within Veeva Commercial Cloud, our~~Our core Veeva CRM application has achieved substantial market penetration of pharmaceutical and biotechnology companies. If our efforts to sustain or further increase the use and adoption of our core CRM application do not succeed, the growth of our ~~Veeva~~ Commercial ~~Cloud~~Solutions revenues may be negatively impacted.

In our fiscal year ended January 31, ~~2021,~~2022, we derived approximately ~~51%~~59% of our subscription services revenues and approximately ~~49%~~56% of our total revenues from our ~~Veeva~~ Commercial ~~Cloud solutions.~~Solutions. In ~~the three months~~our fiscal quarter ended


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April 30, ~~2021,~~2022, we derived approximately ~~49%~~57% of our subscription services revenues and approximately ~~47%~~54% of our total revenues from our ~~Veeva~~ Commercial ~~Cloud solutions.~~Solutions. A significant percentage of our ~~Veeva~~ Commercial ~~Cloud~~Solutions subscription services revenues are derived from subscriptions for our core CRM application, and we have realized substantial sales penetration among pharmaceutical and biotechnology companies for our core Veeva CRM application. If we are not able to sell additional user subscriptions for our core CRM application, if we fail to renew existing subscriptions for our core CRM application, or if subscription levels for our core CRM application are reduced at renewal (as a result of reductions in sales representatives that use our solutions, change in demand for our solutions, or for other reasons), the growth of our ~~Veeva~~ Commercial ~~Cloud~~Solutions revenues may be negatively impacted. ~~We expect~~In the quarter ended October 31, 2020, we disclosed that we expected life sciences companies to reduce the number of sales representatives that they employ by roughly 10% ~~over the next one~~. We currently expect most of these reductions to ~~two years, which~~take place during our fiscal year ending January 31, 2023, with some reductions still occurring in our fiscal year ending January 31, 2024. Such reductions could negatively impact sales of Veeva CRM and certain of our other Commercial ~~Cloud applications in particular,~~Solutions, but we cannot be certain such reductions will happen or of the timing or magnitude of such reductions.

Changes in our senior management team or other key personnel could have a negative effect on our ability to execute our business strategy.

Our success depends in a large part upon the continued service of our senior management team or other key personnel. In particular, our founder and Chief Executive Officer, Peter P. Gassner, is critical to our vision, strategic direction, culture, products, and technology. We do not maintain key-man insurance for Mr. Gassner or any other member of our senior management team. In addition, in the past several years we have experienced changes to our senior leadership team. Such leadership transitions can be inherently difficult to manage, and an unsuccessful transition may cause disruption to our business. In addition, change in the senior management team may create uncertainty among investors and employees or candidates concerning Veeva’s future direction and performance. Any disruption in our operations or uncertainty around our ability to execute could have an adverse effect on our business, financial condition, or results of operations.

Our business could be adversely affected if our customers are not satisfied with the professional or technical support services provided by us or our partners.

Our business depends on our ability to satisfy our customers, both with respect to our solutions and the professional services that are performed in connection with the implementation of our solutions, including training our ~~customers'~~customers’ employees on our solutions. Professional services may be performed by us, by a third party, or by a combination of the two. If a customer is not satisfied with the quality of work performed by us or a third party or with the solutions delivered, then we could incur additional costs to address the situation, we may be required to issue credits or refunds for pre-paid amounts related to unused services, the profitability of that work might be impaired, and the customer’s dissatisfaction with our services could damage our ability to expand the number of solutions subscribed to by that customer. Moreover, negative publicity related to our customer relationships, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers.

Once our solutions are deployed, our customers depend on our support organization to resolve technical issues relating to our solutions. We may be unable to sufficiently accommodate short-term increases in customer demand for technical support services to our ~~customers'~~customers’ satisfaction. Increased customer demand for our technical support services, without corresponding revenues, could increase costs and adversely affect our operating results. In


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addition, our sales process is highly dependent on the reputation of our solutions and business and on positive recommendations from our existing customers. Any failure to maintain high-quality technical support, or a market perception that we do not maintain high-quality support, could adversely affect our reputation, our ability to sell our solutions to existing and prospective customers, and our business and operating results.

Sales to customers outside the United States or with international operations expose us to risks inherent in international sales.

In our fiscal quarter ended April 30, ~~2021,~~2022, customers outside North America accounted for approximately ~~43%~~42% of our total revenues. A key element of our growth strategy is to further expand our international operations and worldwide customer base. Operating in international markets requires significant resources and management attention and subjects us to regulatory, economic, and political risks that are different from those in the United States. We have limited operating experience in some international markets, and we cannot assure you that our expansion efforts into additional international markets will be successful. Our experience in the United States and other international markets in which we already have a presence may not be relevant to our ability to expand in other markets. Our


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international expansion efforts may not be successful in creating further demand for our solutions outside of the United States or in effectively selling our solutions in the international markets we enter. ~~In addition,~~We do not currently have locations or employees in Russia and our revenues from sales to Russian and Belarus entities is limited. However, some of our customers, particularly large multinational companies, have users of our products in Russia that support their Russian operations. If such customers curtail or discontinue their operations in Russia or Belarus, we may lose sales and our results of operations could be negatively impacted. We also historically maintained a small staff and office in Belarus, but we have discontinued our operations there. As noted below, the Russian invasion of Ukraine poses particular risk to certain aspects of our international business.

The risks we face ~~risks~~ in doing business internationally that could adversely affect our business, ~~including:~~include:

•the need and expense to localize and adapt our solutions for specific countries, including translation into foreign languages, and ensuring that our solutions enable our customers to comply with local laws and regulations;

•data privacy and data sovereignty laws which require that customer data be stored and processed in a designated territory;

•difficulties in staffing and managing foreign operations;

•different pricing environments, longer sales cycles and longer accounts receivable payment cycles, and collections issues;

•new and different sources of competition;

•weaker protection for intellectual property and other legal rights than in the United States and practical difficulties in enforcing intellectual property and other rights outside of the United States;

•laws and business practices favoring local competitors;

•compliance challenges related to the complexity of multiple, conflicting and changing governmental laws and regulations, including those related to employment, tax, privacy and data protection, and anti-bribery;

•increased financial accounting and reporting burdens and complexities;

•~~restrictions on the transfer of funds or~~ difficulties in repatriating funds without adverse tax ~~consequences;~~consequences or restrictions on the transfer of funds more generally, including as a result of sanctions arising from the Russian invasion of Ukraine, which may limit our ability to receive payment from Russian banks;

•adverse tax consequences, including the potential for required withholding taxes;

•fluctuations in the exchange rates of foreign currency in which our foreign revenues or expenses may be denominated;

•changes in diplomatic relations and trade policy, including the status of relations between the United States and other countries, including China, Russia, or Belarus, and the implementation of or changes to trade sanctions, tariffs, and ~~embargoes;~~embargoes, including if the United States and other countries were to impose more significant general sanctions against Russia or Belarus in response to the recent invasion of Ukraine, which could ban the use of our products by companies or users in Russia or Belarus;


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•public health crises, such as epidemics and pandemics, including COVID-19; and

•unstable regional and economic political conditions or war in the markets in which we ~~operate.~~operate, including as a result of the Russian invasion of Ukraine.

Some of our business partners also have international operations and are subject to the risks described above. Even if we are able to successfully manage the risks of international operations, our business may be adversely affected if our business partners are not able to successfully manage these risks, which could adversely affect our business.

Our estimate of the market size for our solutions we have provided publicly may prove to be inaccurate, and even if the market size is accurate, we cannot assure you that our business will serve a significant portion of the market.

Our estimate of the market size for our solutions that we have provided publicly, sometimes referred to as total addressable market (TAM), is subject to significant uncertainty and is based on assumptions and estimates, including our internal analysis and industry experience, which may not prove to be accurate. These estimates are, in part, based upon the size of the general application areas we target. Our ability to serve a significant portion of this estimated market is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. For example, in order to address the entire TAM we have identified, we must continue to enhance and add functionality to our existing solutions and introduce new solutions. Accordingly, even if our estimate of the market size is accurate, we cannot assure you that our business will serve a significant portion of this estimated market for our solutions.


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Risks Related to the Principal Industry We Serve

Nearly all of our revenues are generated by sales to customers in the life sciences industry, and factors that adversely affect this industry, including mergers within the life sciences industry or regulatory changes, could also adversely affect us.

Nearly all of our sales are to customers in the life sciences industry. Demand for our solutions could be affected by factors that affect the life sciences industry, including:

•The changing regulatory environment of the life sciences industry—Changes in regulations could negatively impact the business environment for our life sciences customers. Healthcare laws and regulations are rapidly evolving and may change significantly in the future. In particular, legislation or regulatory changes regarding the pricing of drugs and other healthcare treatments sold by life sciences companies, including the extent to which the U.S. government or other governments may establish or negotiate prescription drug prices, has continued to be a topic of discussion by political leaders and regulators in the United States and elsewhere. Significant changes in drug pricing policy or regulation could result in life sciences companies reducing the number of sales representatives that use our products or otherwise reduce demand for our products.

•Consolidation of companies within the life sciences industry—Consolidation within the life sciences industry has accelerated in recent years, and this trend could continue. We have in the past, and may in the future, suffer reductions in user subscriptions or non-renewal of customer subscription orders due to industry consolidation. We may not be able to expand sales of our solutions and services to new customers enough to counteract any negative impact of company consolidation on our business. In addition, new companies that result from such consolidation may decide that our solutions are no longer needed because of their own internal processes or alternative solutions. As these companies consolidate, competition to provide solutions and services will become more intense and establishing relationships with large industry participants will become more important. These industry participants may also try to use their market power to negotiate price reductions for our solutions. If consolidation of our larger customers occurs, the combined company may represent a larger percentage of business for us and, as a result, we are likely to rely more significantly on revenue from the combined company to continue to achieve growth. In addition, if large life sciences companies merge, it would have the potential to reduce per-unit pricing for our solutions for the merged companies or to reduce demand for one or more of our solutions as a result of potential personnel reductions over time.

•Bankruptcy within the life sciences industry—Life sciences companies, and in particular early-stage companies with pre-commercial treatments in clinical trials, may be unsuccessful and may


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subsequently declare bankruptcy. If our customers declare bankruptcy or otherwise dissolve, they may terminate their agreements with us or we may not be able to recoup the full payment of fees owed to us.

•Changes in market conditions and practices within the life sciences industry—The expiration of key patents, the implications of precision medicine treatments, changes in the practices of prescribing physicians and patients, changes with respect to payer relationships, the policies and preferences of healthcare professionals and healthcare organizations with respect to the sales and marketing efforts of life sciences companies, changes in the regulation of the sales and marketing efforts and pricing practices of life sciences companies, and other factors such as the impact of COVID-19, could lead to a significant reduction in sales representatives that use our solutions or otherwise change the demand for our solutions. ~~We expect~~In the quarter ended October 31, 2020, we disclosed that we expected life sciences companies to reduce the number of sales representatives that they employ by roughly 10% ~~over the next one~~. We currently expect most of these reductions to ~~two years, which~~take place during our fiscal year ending January 31, 2023, with some reductions still occurring in our fiscal year ending January 31, 2024. Such reductions could negatively impact sales of our solutions, including Veeva CRM and certain of our other Commercial ~~Cloud applications in particular.~~Solutions. We cannot be certain such reductions will happen or of the magnitude of such reductions. Changes in public perception regarding the practices of the life sciences industry may result in political pressure to increase the regulation of life sciences companies in one or more of the areas described above, which may negatively impact demand for our solutions.

•Changes in global economic and geopolitical conditions ~~and~~that impact clinical trial activity, changes in the ability to sell healthcare treatments in certain locations, and the global availability of healthcare treatments provided by the life sciences companies to which we sell—Our business depends on the overall economic health of our existing and prospective customers. The purchase of our solutions may involve a significant commitment of capital and other resources. If economic or geopolitical conditions ~~including~~deteriorates, or the ability to market life sciences products or conduct clinical trials in key markets is disrupted, including as a result of the Russian invasion of Ukraine or resulting sanctions, or if the demand for life sciences products globally deteriorates ~~many of~~for other reasons, our customers may delay or reduce their IT ~~spending.~~spending, particularly within the regions impacted by negative economic or geopolitical conditions. For example, it has been reported that a number of significant life sciences companies plan to scale back sales, operations and investments in Russia, including curtailing sales and marketing and clinical trial activity in Russia. It is also possible that clinical trial activity may be disrupted or delayed in the regions near Ukraine as clinical trial sites deal with the healthcare impact of the Russian invasion of Ukraine. This could result in reductions in sales of our solutions, longer sales cycles, reductions in subscription duration and value, slower adoption of new product offerings, and increased price competition.


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Accordingly, our operating results and our ability to efficiently provide our solutions to life sciences companies and to grow or maintain our customer base could be adversely affected as a result of these factors and others that affect the life sciences industry generally.

Our solutions address heavily regulated functions within the life sciences industry, and failure to comply with applicable laws and regulations could lessen the demand for our solutions or subject us to significant claims and losses.

Our customers use our solutions for business activities that are subject to a complex regime of global laws and regulations, including requirements for maintenance of electronic records and electronic signatures, requirements regarding drug sample tracking and distribution, requirements regarding system validations, requirements regarding processing of health data, and other laws and regulations. Our customers expect to be able to use our solutions in a manner that is compliant with the regulations to which they are subject. Our efforts to provide solutions that comply with such laws and regulations are time-consuming and costly and include validation procedures that may delay the release of new versions of our solutions. As these laws and regulations change over time, we may find it difficult to adjust our solutions to comply with such changes.

In addition, many countries and self-regulatory bodies impose requirements regarding payments and transfers of value from life sciences companies to healthcare professionals. For example, our current and prospective customers may be required to comply with the U.S. federal legislation commonly referred to as the Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, and its implementing regulations (Sunshine Act). The Sunshine Act requires certain manufacturers of drugs, devices, biologics, and medical supplies, with specific exceptions, to report annually to the government information related to certain payments and other transfers of value to physicians. Our


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solutions and services targeted at life sciences companies, including, for example, Veeva Digital Events, are used by our customers to assist with their reporting obligations under the Sunshine Act. If our solutions and services fail to assist our customers to meet such reporting obligations in a timely and accurate manner, demand for our solutions could decrease, which could adversely affect our business.

As we increase the number of products we offer and the number of countries in which we operate, the complexity of adjusting our solutions to comply with legal and regulatory changes will increase. If we are unable to effectively manage this increased complexity or if we are not able to provide solutions that can be used in compliance with applicable laws and regulations, customers may be unwilling to use our solutions, and any such non-compliance could result in the termination of our customer agreements or claims arising from such agreements with our customers. Furthermore, we have in the past and may in the future be subject to inspections or audits by government agencies or other regulatory bodies to verify our customers’ compliance with applicable laws, regulations, or GxP principles.

Additionally, any failure of our customers to comply with laws and regulations applicable to the functions for which they use our solutions could result in investigations by regulatory authorities, fines, penalties, or claims for substantial damages against our customers that may, in turn, harm our business or reputation. If such failure were allegedly caused by our solutions or services, our customers may make a claim for damages against us, regardless of our responsibility for the failure. We may be subject to investigations and lawsuits that, even if unsuccessful, could divert our resources and our management’s attention and adversely affect our business and customer relationships, and our insurance coverage may not be sufficient to cover such claims against us.

Increasingly complex data protection and privacy regulations are burdensome, may reduce demand for our solutions, and non-compliance may impose significant liabilities.

Our customers use our solutions to collect, use, process, store, and disclose personal data or identifiable information regarding their employees, healthcare professionals, and patients (including potentially sensitive data such as health data). In many countries, governmental bodies have adopted or may adopt laws and regulations regarding the collection, use, processing, storage, and disclosure of personal data, making compliance an increasingly complex task.

For example, in the United States, the U.S. Department of Health and Human Services promulgated privacy and security rules under ~~HIPAA~~the Health Insurance Portability and Accountability Act of 1996 (HIPAA) that cover protected health information (PHI) by limiting use and disclosure and giving individuals the right to access, amend, and seek accounting of their PHI. Certain of our customers may be either business associates or covered entities under HIPAA. For example, while HIPAA generally is not applicable to pharmaceutical companies, some of our customers are clinical research sites, such as university hospitals, and may provide healthcare service as well as clinical research and may be required to comply with HIPAA. Therefore, in


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certain scenarios, HIPAA is applicable to PHI that is introduced into our solutions, and we must maintain a HIPAA compliance program.

Veeva Crossix provides analytics derived from de-identified third-party health and consumer data on U.S. residents that life sciences companies use for measurement of their advertising objectives. All PHI processed by Crossix for its measurement services is certified to satisfy HIPAA’s de-identification standard. Certain states have signed into law or are intending to enact laws regarding requirements on de-identified information, and there is some uncertainty regarding those laws' conformity with the HIPAA de-identification standards. Compliance with state laws could require additional investment and management attention and may subject us to significant liabilities if we do not comply appropriately with new and potentially conflicting regulations.

In addition to government regulations, privacy advocates and other key industry players have established or may establish various new, additional, or different policies or self-regulatory standards, such as the prohibition of third-party cookies and other identifiers in certain digital environments that may place additional burdens or resource constraints on us, limit our ability to collect and use certain data, and limit our ability to generate certain analytics. Our customers may expect us to meet voluntary certifications or adhere to other standards established by third parties. Moreover, the continuing evolution of these standards might cause confusion for our customers and may have an impact on the solutions we offer, including our data products. If we are unable to maintain these certifications or meet these standards, it could reduce demand for our solutions and adversely affect our business and operating results.

Under the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA), we are generally considered a ~~service provider and business~~“service provider” for our software solutions and a “business” for our data ~~products, respectively.~~and analytics products. Several other states have signed into law or are intending to enact laws regarding requirements on personal information. There is also the potential for the U.S. federal government to pass data privacy laws. These laws, regulations and legislative developments have potentially far-reaching consequences and may require us to modify our data management practices and to incur substantial expense in order to comply.


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Under the European General Data Protection Regulation (GDPR), we act as a data controller for our data products, Veeva OpenData and Veeva Link, and a data processor with respect to our software solutions. Regarding data transfer, the European Court of Justice invalidated the EU-U.S. Privacy Shield Framework and we now rely solely on the EU Standard Contractual Clauses (SCCs) to ensure that our European customers have the appropriate legal mechanisms in place for their personal data to be accessed within the United States. Management has spent considerable time and resources to respond to customer inquiries as a result of this decision. Additionally, in June 2021, the European Commission issued revised SCCs, which are required to be implemented, and in February 2022, the United Kingdom’s Information Commissioner’s Office issued new standard contractual clauses (the UK SCCs), to support personal data transfers out of the United Kingdom. The United Kingdom’s Parliament approved the UK SCCs for use in March 2022. We may be required to take additional steps to legitimize any personal data transfers impacted by these developments, be required to engage in new contract negotiations with third parties that aid in processing personal data on our behalf, and may be subject to increased costs of compliance and limitations on our service providers and us. There is also a trend toward countries enacting data localization or other country specific requirements which could be problematic to cloud software providers. Understanding and implementing ~~such~~ country, industry, and customer specific requirements and certifications on top of our internationally recognized security certifications could require additional investment and management attention and may subject us to significant liabilities if we do not comply with ~~particular~~applicable requirements. Compliance with global laws and regulations relating to privacy, ~~laws~~data protection, and cybersecurity has and will continue to require valuable management and employee time and resources, and any actual or perceived failure to comply with these laws and regulations could include severe penalties and could reduce demand for our solutions. Additionally, other countries outside of the EU have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency. For example, in 2021, China adopted the Personal Information Protection Law (PIPL), together with the Cybersecurity Law (CSL) and the Data Security Law (DSL), which have required and will continue to require significant investment and resources to develop our position and provide compliant solutions for our customers. Further, the United Kingdom’s exit from the EU, and ongoing developments in the United Kingdom, have created uncertainty with regard to data protection regulation in the United Kingdom. Although the European Commission adopted an adequacy decision for the United Kingdom in June 2021 that allows for the continued flow of personal data from the EU to the United Kingdom, this decision may be revoked or modified and will need to be renewed after four years from the date of adoption.

Customers expect that our solutions can be used in compliance with data protection and data privacy laws and regulations. The functional and operational requirements and costs of compliance with such laws and regulations may adversely impact our business, and failure to enable our solutions to comply with such laws and regulations could lead to regulatory investigations and other proceedings, significant fines, penalties, and ~~penalties~~other relief imposed by regulators, ~~as well as~~and claims, demands, and litigation by our customers or third ~~parties.~~parties, which may result in substantial damages and other liabilities. Additionally, all of these domestic and international legislative and regulatory initiatives could adversely affect our customers’ ability or desire to collect, use, process, store, and disclose personal information and health data using our solutions, or to license data products from us, which could reduce demand for our solutions.

Risks Related to Our Reliance on Third Parties

If the third-party providers of healthcare professional and healthcare organization data and prescription drug sales data do not allow our customers to upload and use such data in our solutions, the demand for our solutions may decrease, and our business may be negatively impacted.

Many of our customers license healthcare professional and healthcare organization data and data regarding the sales of prescription drugs from third parties such as IQVIA. In order for our customers to upload such data to the Veeva CRM, Veeva Network Customer Master, Veeva Nitro, and other Veeva applications, such third-party data providers typically must consent to such uploads and often require that we enter into agreements regarding our obligations with respect to such data, which include confidentiality obligations and intellectual property rights with respect to such third-party data. We have experienced delays and difficulties in our negotiations with such third-party data providers in the past, and we expect to experience difficulties in the future. For instance, IQVIA currently


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will not consent tothat customers using its healthcare professional or healthcare organization data ~~being uploaded~~may upload such data to Veeva Network Customer Master and this has negatively affected sales and customer adoption of Veeva Network Customer Master. To date, IQVIA has also restricted customers from uploading any of its data to Veeva Nitro and Veeva Andi, and has denied use of its data with certain other Veeva ~~applications.~~applications and for certain other use cases. In addition, IQVIA has stated publicly that it will deny all customer requests for use of new IQVIA data types in Veeva applications, including, as examples, real world data, real world evidence, and genomics. Similarly, sales


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and customer adoption of Veeva OpenData has been negatively impacted by certain restrictions on the use of IQVIA data during customer transitions from IQVIA data to Veeva OpenData. If third-party data providers, particularly IQVIA, do not consent to the uploading and use of their data in our solutions, delay consent, or fail to offer reasonable conditions for the upload and use of their data in our solutions, our sales efforts, solution implementations, and productive use of our solutions by customers, which have been harmed by such actions in the past, may continue to be harmed. Restrictions on the ability of our customers to use third-party data in our solutions may also decrease demand for our solutions or may cause customers to consider purchasing solutions that are not subject to the same restrictions. For example, in 2020, it was reported that a significant Veeva CRM customer launched a project to implement IQVIA’s competitive software offering for portions of its CRM users, in part as a result of concerns about restrictions imposed by IQVIA for the use of IQVIA data in certain Veeva software applications. If these third-party data limitations persist, our business may be negatively impacted.

We rely on third-party providers—including salesforce.com and Amazon Web Services—for computing infrastructure, secure network connectivity, and other technology-related services needed to deliver our cloud solutions. Any disruption in the services provided by such third-party providers could adversely affect our business and subject us to liability.

Our solutions are hosted from and use computing infrastructure provided by third parties, including salesforce.com with respect to Veeva CRM and certain of our multichannel CRM applications, Amazon Web Services with respect to applications on the Veeva Vault ~~applications, Veeva Network applications,~~platform and certain ~~other Veeva~~ Commercial ~~Cloud applications,~~Solutions, and, to a lesser extent, other computing infrastructure service providers.

We do not own or control the operation of the third-party facilities or equipment used to provide the services described above. Our computing infrastructure service providers have no obligation to renew their agreements with us on commercially reasonable terms or at all. If we are unable to renew these agreements on commercially reasonable terms, we may be required to transition to a new provider and we may incur significant costs and possible service interruption in connection with doing so. In addition, such service providers could decide to close their facilities or change or suspend their service offerings without adequate notice to us. Moreover, any financial difficulties, such as bankruptcy, faced by such service providers may have negative effects on our business, the nature and extent of which are difficult to predict. Since we cannot easily switch computing infrastructure service providers, any disruption with respect to our current providers would impact our operations and our business could be adversely impacted.

Problems faced by our computing infrastructure service providers could adversely affect the experience of our customers. For example, salesforce.com and Amazon Web Services have experienced significant service outages in the past and may do so again in the future. Additionally, our failure to manage or react to an increase in customer demand could have an adverse effect on our business. A rapid expansion of our business or an increase in customer demand could affect our service levels or cause our systems to fail. Our agreements with third-party computing infrastructure service providers may not entitle us to corresponding service level credits to those we offer to our customers. Any changes in third-party service levels at our computing infrastructure service providers or any related disruptions or performance problems with our solutions could result in lengthy interruptions in our services, damage our customers’ stored files, or result in potential losses of customer data, any of which could adversely affect our reputation. Interruptions in our services might reduce our revenues, cause us to issue refunds to customers for prepaid and unused subscriptions, subject us to service level credit claims and potential liability, or adversely affect our renewal rates.

Because key and substantial portions of our multichannel CRM applications are built on salesforce.com’s Salesforce Platform, we are dependent upon salesforce.com to provide these solutions to our customers and we are bound by the restrictions of our agreement with salesforce.com, which limits the markets to which we may sell our Veeva CRM solution.

Our Veeva CRM application and certain portions of the multichannel CRM applications that complement our Veeva CRM application are developed on or utilize the Salesforce Platform of salesforce.com, and we are dependent upon the continued use of the Salesforce Platform as combined with the proprietary aspects of our multichannel CRM applications.


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Our agreement with salesforce.com expires on September 1, 2025. However, salesforce.com has the right to terminate the agreement in certain circumstances, including in the event of a material breach of the agreement by us, or that salesforce.com is subjected to third-party intellectual property infringement claims based on our solutions (except to the extent based on the Salesforce Platform) or our trademarks and we do not remedy such infringement in accordance with the agreement. Also, if we are acquired by specified companies, salesforce.com may terminate the agreement upon notice of not less than 12 months. If salesforce.com terminates our agreement under these


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circumstances, our customers will be unable to access Veeva CRM and certain other of our multichannel CRM applications. A termination of the agreement would cause us to incur significant time and expense to acquire rights to, or develop, a replacement CRM platform, and we may not be successful in these efforts. Even if we were to successfully acquire or develop a replacement CRM platform, some customers may decide not to adopt the replacement platform and may decide to use a different CRM solution. If we were unsuccessful in acquiring or developing a replacement CRM platform or acquired or developed a replacement CRM platform that our customers do not adopt, our business, operating results and brand may be adversely affected.

Also, if either party elects not to renew the agreement at the end of its September 1, 2025 term or if the agreement is terminated by us as a result of salesforce.com’s breach, the agreement provides for a five-year wind-down period in which we would be able to continue providing the Salesforce Platform as combined with the proprietary aspects of our solutions to our existing customers but would be limited with respect to the number of additional subscriptions we could sell to our existing customers. After the wind-down period, we would no longer be able to use the Salesforce Platform.

Our agreement with salesforce.com provides that we can use the Salesforce Platform as combined with our proprietary Veeva CRM application to sell sales automation solutions only to drug makers in the pharmaceutical and biotechnology industries for human and animal treatments, which does not include the medical device industry or products for non-drug departments of pharmaceutical and biotechnology companies. Sales of the Salesforce Platform in combination with our Veeva CRM application to additional industries would require the review and approval of salesforce.com. Our inability to freely sell our Veeva CRM application outside of drug makers in the pharmaceutical and biotechnology industries may adversely impact our growth.

While our agreement with salesforce.com, subject to certain exceptions including pre-existing arrangements, provides that salesforce.com will not position, develop, promote, invest in, or acquire applications directly competitive to the Veeva CRM application for sales automation that directly target drug makers in the pharmaceutical and biotechnology industry or the pharma/biotech industry, our remedy for a breach of this commitment by salesforce.com would be to terminate the agreement, or continue the agreement but be released from our minimum order commitments from the date of salesforce.com’s breach forward. While our agreement with salesforce.com also restricts salesforce.com from competing with us with respect to sales opportunities for sales automation solutions for the pharmaceutical and biotechnology industry unless such competition has been pre-approved by salesforce.com’s senior management based on certain criteria specified in the agreement, and imposes certain limits on salesforce.com from entering into new arrangements after March 3, 2014 that are similar to ours with other parties with respect to sales automation applications for the pharmaceutical and biotechnology industry, it does not restrict a salesforce.com customer’s ability (or the ability of salesforce.com on behalf of a specific salesforce.com customer) to customize or configure the Salesforce Platform, and our remedy for a breach of these restrictions by salesforce.com would be to terminate the agreement, or continue the agreement but be released from our minimum order commitments from the date of salesforce.com’s breach forward. Some current or potential customers of ours may choose to build custom solutions using the Salesforce Platform rather than buying our solutions.

Also, in 2019, salesforce.com announced a strategic partnership with Alibaba, a Chinese company, through which Alibaba will become the exclusive provider of Salesforce in mainland China, Hong Kong, Macau, and Taiwan. The timeframe and exact parameters of changes to salesforce.com offerings in the listed regions has not been announced. Our existing agreement with salesforce.com allows us to sell our CRM solutions to drug makers in the pharmaceutical and biotechnology industries in mainland China, Hong Kong, Macau, and Taiwan, and our right to do so is not impacted by the Alibaba partnership. However, our ability to offer our CRM solutions from data centers located in the listed regions may be limited if salesforce.com does not operate data centers in the listed regions in the future and we do not contract for such data center services from Alibaba. If our inability to offer our CRM solutions from data centers located in the listed regions negatively impacts the performance of our solutions in those regions or causes legal compliance concerns, or if customers in the listed regions prefer their CRM solutions to be hosted from local data centers, our business may be negatively affected.


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We employ third-party licensed software and software components for use in or with our solutions, and the inability to maintain these licenses or the presence of errors or security vulnerabilities in the software we license could limit the functionality of our products and result in increased costs or reduced service levels, which would adversely affect our business.

In addition to our employment of the Salesforce Platform through our agreement with salesforce.com, our solutions incorporate or use certain third-party software and software components obtained under licenses from other companies. We also use third-party software and tools in the development process for our solutions to manage and monitor our computing infrastructure, and to provide professional services and support our customers. For example,


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our Veeva CRM Engage Meeting application uses a purpose-built partner tool from Zoom Video Communications, Inc., which is critical to the ~~application's~~application’s functionality. We anticipate that we will continue to rely on such third-party software and development tools in the future. Although we believe that there are commercially reasonable alternatives to the third-party software we currently license, this may not always be the case, or it may be difficult or costly to replace. In addition and although we maintain a supplier security evaluation process, if the third-party software we use has errors, security vulnerabilities, or otherwise malfunctions, the functionality of our solutions may be negatively impacted, our customers may experience reduced service levels, and our business may suffer.

Our solutions utilize open source software, and any failure to comply with the terms of one or more of these open source licenses could adversely affect our business.

Our solutions include software covered by open source licenses. The terms of various open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market our solutions. It is possible under the terms of certain open source licenses, if we combine our proprietary software with open source software in a certain manner, that we could be required to release the source code of our proprietary software and make our proprietary software available under open source licenses. In the event that portions of our proprietary software are determined to be subject to an open source license, we could be required to publicly release the affected portions of our source code, re-engineer all or a portion of our solutions, or otherwise be limited in the licensing of our solutions, each of which could reduce or eliminate the value of our solutions. In addition to risks related to license requirements, use of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of the software. Many of the risks associated with the use of open source software cannot be eliminated and could adversely affect our business.

Risks Related to Our Financial Performance, How We Contract with Customers, and the Financial Position of Our Business

Our historic growth rates of total revenues and subscription services revenues should not be viewed as indicative of our future performance.

While we have experienced significant revenue growth in prior periods, it is not indicative of our future revenue growth. We expect our longer-term revenue growth rate will decline. In our fiscal years ended January 31, 2022, 2021, ~~2020,~~ and ~~2019,~~2020, our total revenues grew by ~~33%~~26%, ~~28%~~33%, and ~~25%~~28% respectively, as compared to total revenues from the prior fiscal years. In our fiscal years ended January 31, 2022, 2021, ~~2020,~~ and ~~2019,~~2020, our subscription services revenues grew by ~~32%~~26%, ~~29%~~32%, and ~~24%~~29% respectively, as compared to subscription services revenues from the prior fiscal years. Please note that our total revenues and subscription services revenues for the fiscal year ended January 31, 2020 only included revenue contribution from Crossix and Physicians World in the fourth quarter of that fiscal year. In our fiscal quarter ended April 30, ~~2021,~~2022, our total revenues grew by ~~29%~~16% and our subscription services revenues grew by ~~26%~~18% as compared to the same quarterly period ~~last~~in the prior fiscal year. Our total revenues and subscription services revenue growth rates have declined in the past, and we expect them to decline again in the future. If we are unable to maintain consistent revenue growth, it may adversely impact our profitability and the value of our Class A common stock.

Our results may fluctuate from period to period, which could prevent us from meeting our own guidance or security analyst or investor expectations.

Our results of operations, including our revenues, gross margin, operating margin, profitability, cash flows, calculated billings, and deferred revenue, as well as other metrics we may report, may vary from period to period for a variety of reasons, including those listed elsewhere in this “Risk Factors” section, and period-to-period comparisons of our operating results may not be meaningful. Accordingly, our quarterly results should not be relied upon as an indication of future performance. Additionally, from time to time, we issue guidance and provide


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commentary regarding our expectations for certain future financial results and other metrics on both a near-term and long-term basis. Our guidance is based upon a number of assumptions and estimates that are subject to significant business, economic, and competitive uncertainties that are beyond our control and are based upon assumptions about future business and accounting decisions that may change or be wrong. Our guidance may prove to be incorrect, and actual results may differ from our guidance. Fluctuations in our results or failure to achieve our guidance or security analyst or investor expectations, even if not materially, could cause the price of our Class A common stock to decline substantially, and our investors could incur substantial losses.


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The majority of our subscription agreements with our customers are for a term of one year. If our existing customers do not renew their subscriptions, or do not buy additional solutions and user subscriptions from us, or renew at lower aggregate fee levels, our business and operating results will suffer.

We derive a significant portion of our revenues from the renewal of existing subscription orders. The majority of our customers’ orders for subscription services have one-year terms. However, more recently and with respect to solutions other than our core Veeva CRM application and particularly with respect to certain of our Vault applications, we have entered into a number of orders with multi-year terms. Our customers have no obligation to renew their subscriptions after their orders expire. Thus, securing the renewal of our subscription orders and selling additional solutions and user subscriptions is critical to our future operating results. Factors that may affect the renewal rate for our solutions and our ability to sell additional solutions and user subscriptions include:

•the price, performance, and functionality of our solutions;

•the effectiveness of our professional services;

•the strength of our business relationships with our customers;

•the availability, price, performance, and functionality of competing solutions and services;

•our ability to develop complementary solutions, applications, and services;

•the stability, performance, and security of our hosting infrastructure and hosting services; and

•the business environment of our customers and, in particular, acquisitions of or business combinations between our customers or other business developments that may result in reductions in user subscriptions.

In addition, our customers may negotiate terms less advantageous to us upon renewal, which could reduce our revenues from these customers. As a customer’s total spend on Veeva solutions increases, we expect purchasing scrutiny at renewal to increase as well, which may result in reductions in user subscriptions or increased pricing pressure. Other factors that are not within our control may contribute to a reduction in our subscription services revenues. For instance, our customers may reduce their number of sales representatives, which would result in a corresponding reduction in the number of user subscriptions needed for some of our solutions and thus a lower aggregate renewal fee, or our customers may discontinue clinical trials for which our solutions are being used. If our customers fail to renew their subscription orders, renew their subscription orders with less favorable terms or at lower fee levels, or fail to purchase new solutions, applications, or professional services from us, our revenues may decline or our future revenues may be constrained.

As our costs increase, we may not be able to sustain the level of profitability we have achieved in the past.

We expect our future expenses to increase as we continue to invest in and grow our business. We expect to incur significant future expenditures related to:

•developing new solutions and enhancing our existing solutions, including additional data acquisition costs associated with our Veeva ~~Data Cloud~~Compass offering and investment in our product development teams;

•improving the technology infrastructure, scalability, availability, security, and support for our solutions;

•sales and marketing, including expansion of our direct sales organization and global marketing programs;

•expansion of our professional services organization;

•pending, threatened, or future legal proceedings, certain of which are described in Part II, Item 1. “Legal Proceedings” and note 13 of the notes to our condensed consolidated financial statements, and which we expect to continue to result in significant expense for the foreseeable future;

•international expansion;

•acquisitions and investments; and

•general operations, IT systems, facilities, and administration, including legal and accounting expenses.

Additionally, in response to unusual inflationary pressure and the demand environment for skilled employees, we increased salaries for the majority of our employees by 5% effective September 1, 2021, which increases our expenses. Further, in light of the labor market conditions and inflationary pressure, our compensation increases in connection with our annual compensation review process, which took place in our fiscal quarter ended April 30, 2022, were higher than previous years. These compensation changes are likely to increase our expenses. If our


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•~~international expansion;~~

•~~acquisitions and investments; and~~

•~~general operations, IT systems, facilities, and administration, including legal and accounting expenses.~~

~~If our~~ efforts to increase revenues and manage our expenses are not successful, or if we incur costs, damages, fines, settlements, or judgments as a result of other risks and uncertainties described in this report, we may not be able to sustain or increase our historical levels of profitability.

Our revenues and gross margin from professional services fees are volatile and may not increase from quarter to quarter or at all.

We derive a significant portion of our revenue from professional services fees. Our professional services revenues fluctuate from quarter to quarter as a result of the requirements, complexity, and timing of our customers’ implementation projects. Generally, a customer’s ongoing need for professional services decreases as the implementation and full deployment of our solutions is completed. Our customers may also choose to use third parties rather than us for certain professional services related to our solutions. As a result of these and other factors, our professional services revenues may not increase on a quarterly basis in the future or at all. Additionally, the gross margin generated from professional services fees fluctuates based on a number of factors which may vary from period to period, including the average billable hours worked by our billable professional services personnel, our average hourly rates for professional services and the margin on professional services subcontracted to our third-party systems integrator partners. As a result of these and other factors, the gross margin from our professional services may not increase on a quarterly basis in the future or at all.

Because we recognize subscription services revenues ratably over the term of an order for our subscription services, it may be difficult to evaluate our future financial performance.

We generally recognize subscription services revenues ratably over the term of an order under our subscription agreements. As a result, a substantial majority of our quarterly subscription services revenues are generated from subscription agreements entered into during prior periods. Consequently, a decline in new subscriptions in any quarter may not affect our results of operations in that quarter but could reduce our revenues in future quarters. Additionally, the timing of renewals or non-renewals of a subscription agreement during any quarter may only affect our financial performance in future quarters. For example, the non-renewal of a subscription agreement late in a quarter will have minimal impact on revenues for that quarter but will reduce our revenues in future quarters.

Accordingly, the effect of significant declines in sales and customer acceptance of our solutions may not be reflected in our short-term results of operations, which would make these reported results less indicative of our future financial results. By contrast, a non-renewal occurring early in a quarter may have a significant negative impact on revenues for that quarter and we may not be able to offset a decline in revenues due to the non-renewal with revenues from new subscription agreements entered into in the same quarter.

~~Additionally, with~~With respect to certain of our software products, we regularly enter into orders with multi-year terms, some of which may have fee structures that ramp over the term of the order. The difference between the fees invoiced in the first year of a multi-year ramping order and the last year of such an order can sometimes be significant. When such multi-year orders ~~in which fees increase from year to year,~~are non-cancellable (other than for cause), we recognize ~~ratably~~ the total contracted revenue ~~for~~ratably over the ~~entire~~ multi-year term of the order. As a result, in the initial year of such orders, we will recognize more revenue than the fees we invoice for the same period, and in the last year of such orders, we will recognize less revenue than the fees we invoice for the same period. ~~Moreover, such multi-year orders could renew at fees greater than the revenue that was recognized in the last year of the order, which could result in fluctuations in our financial results. We~~In this scenario, we may also be exposed to impaired contract assets if, for example, a customer ~~terminated an otherwise non-cancelable~~terminates a multi-year ~~contract~~order with ramping fees for cause. By contrast, when a multi-year order with ramping fees includes a right of termination without cause during the term of the order, the revenue recognized in any year of the order will be consistent with the fees invoiced in the same year. Therefore, our reported ~~results could~~revenue in any quarter or year may not correspond to the amounts we are entitled to bill in the same period and may not be ~~less indicative~~a precisely accurate indication of the actual health of our business at the time revenue is reported.

Deferred revenue and change in deferred revenue may not be accurate indicators of our future financial results.


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~~have also agreed from time to time, and may agree in the future, to allow customers to change the renewal dates of~~ their orders to, for example, align more closely with a customer’s annual budget process or to align with the renewal dates of other orders placed by other entities within the same corporate control group, or to change payment terms from annual to quarterly, or vice versa. Such changes typically result in an order of less than one year to align all orders to the desired renewal date and, thus, may result in a lesser increase to deferred revenue than if the adjustment had not occurred. Additionally, changes in renewal dates may change the fiscal quarter in which deferred revenue associated with a particular order is booked. Accordingly, we do not believe that changes on a quarterly basis in deferred revenue, unbilled accounts receivable, or calculated billings, a metric commonly cited by financial analysts, are accurate indicators of the underlying momentum of our business or future revenues. We believe that our subscription revenue guidance and calculated billings guidance for the full fiscal year are the best indicators of the momentum of our business or future revenues. Please note that we define the term calculated billings for any period to mean revenue for the period plus the change in deferred revenue from the immediately preceding period minus the change in unbilled accounts receivable from the immediately preceding period. However, many companies that provide cloud-based software report changes in deferred revenue or calculated billings as key operating or financial metrics, and it is possible that analysts or investors may view these metrics as important. Thus, any changes in our deferred revenue balances or deferred revenue trends, or in the future, our unbilled accounts receivable balances or trends, could adversely affect the market price of our Class A common stock.

Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar transactional taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our results of operations.

We do not collect sales and use, value added or similar transactional taxes in all jurisdictions in which we have sales but no physical presence, based on our determination that such taxes are not applicable or that we are not required to collect such taxes with respect to the jurisdiction. Sales and use, value added and similar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collect and remit such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, and we may be required to collect such taxes in the future. Such tax assessments, penalties and interest or future requirements, including based on changes in tax laws, may adversely affect our results of operations. We believe that our financial statements reflect adequate reserves to cover such a contingency, but there can be no assurances in that regard.

Unanticipated changes in our effective tax rate and additional tax liabilities, including as a result of our international operations or implementation of new tax rules, could harm our future results.

We are subject to income taxes in the United States and various foreign jurisdictions. Our domestic and international tax liabilities are subject to the allocation of expenses in differing jurisdictions and complex transfer pricing regulations administered by taxing authorities in these jurisdictions. Tax rates may change as a result of factors outside of our control or relevant taxing authorities may disagree with our determinations as to the income and expenses attributable to specific jurisdictions. In addition, changes in tax and trade laws, treaties or regulations, or their interpretation or enforcement, have become more unpredictable and may become more stringent, which could have a material adverse effect on our tax position. Additionally, volatility in our stock price would affect the excess tax benefits from our equity compensation, which may adversely impact our effective tax rate. Forecasting our estimated annual effective tax rate is complex and subject to uncertainty, and there may be material differences between our forecasted and actual tax rates. Moreover, increases in our effective tax rate would reduce our profitability.

Our tax provision could also be impacted by changes in accounting principles and changes in U.S. federal and state or international tax laws applicable to multinational corporations. For example, the Tax Cuts and Jobs Act of 2017 ~~(Tax Act) significantly changed how~~eliminates the ~~U.S. Department~~option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years. Although Congress is considering legislation that would defer the amortization requirement to later years, we have no assurance that the provision will be so deferred, repealed or otherwise modified. If the requirement is not modified, it will materially reduce our cash flows beginning in the second quarter of ~~Treasury imposes income taxes on U.S. corporations.~~fiscal 2023. We made significant judgments and assumptions in the interpretation of this new law and in our calculations reflected in our financial statements. Furthermore, on June 29, 2020, California Governor Newsom signed Assembly Bill No. 85 as part of the California 2020 Budget Act, which temporarily suspends the use of California net operating losses and imposes a limitation on the amount of business incentive tax credits that may impact our tax liabilities in future periods. In addition, ~~increases in corporate tax rates, such as have been proposed by~~ the current U.S. administration has released various tax legislation proposals. If enacted, these changes could increase our effective tax rate and have an adverse effect on our results of operations.

Any changes in taxing jurisdictions' administrative interpretations, decisions, policies, and positions could also impact our tax liabilities. The overall tax environment has made it increasingly challenging for multinational corporations to operate with certainty about taxation in many jurisdictions. The ~~Organization~~Organisation for Economic Co-operation and Development, which represents a coalition of member countries, is supporting changes to numerous long-standing tax rules, including changes to the practice of shifting profits among affiliated entities located inCo-


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operation and Development (OECD), which represents a coalition of member countries, is supporting changes to numerous long-standing tax rules, including changes to the practice of shifting profits among affiliated entities located in different tax jurisdictions. ~~Additionally,~~For example, on October 8, 2021, the OECD announced an international agreement with more than 130 countries to implement a global minimum effective corporate tax rate of 15% for certain large multinational companies starting in 2023. The agreement also introduced rules that would result in the reallocation of certain taxing rights from multinational companies from their home countries to the markets where they have business activities and earn profits—regardless of physical presence—and could impact certain tax measures in the European Union, such as the Digital Tax Service described below. Certain countries in the European Union, as well as India, have enacted or are proposing various forms of non-income based taxes, such as a Digital Service Tax. Generally, such a tax is based on a percentage of gross revenue associated with digital service transactions. We continue to monitor the developments and tax implications surrounding changes in the global tax environment. The increasingly complex global tax environment could have a material adverse effect on our effective tax rate, results of operations, cash flows, and financial condition.

Finally, we have been, and may be in the future, subject to income tax audits throughout the world. We believe our income, employment, and transactional tax liabilities are reasonably estimated and accounted for in accordance with applicable laws and principles, but an adverse resolution of one or more uncertain tax positions in any period could have a material impact on the results of operations for that period.

Currency exchange fluctuations may negatively impact our financial results.

Some of our international agreements provide for payment denominated in local currencies, and the majority of our local costs are denominated in local currencies. As we continue to expand our operations in countries outside the United States, an increasing proportion of our revenues and expenditures in the future may be denominated in foreign currencies. Fluctuations in the value of the U.S. dollar versus foreign currencies may impact our operating results when translated into U.S. dollars. Thus, our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, British Pound Sterling, Japanese Yen, ~~and~~ Chinese Yuan, and Canadian Dollar, and may be adversely affected in the future due to changes in foreign currency exchange rates. While we have limited currency exchange exposure to the Russian, Belarusian and Ukrainian currencies, we expect exchange rates with respect to these currencies to be volatile and other exchange rates may also be more volatile than normal as a result of the Russian invasion of Ukraine and related events. Changes in exchange rates may negatively affect our revenues, expenses, and other operating results as expressed in U.S. dollars in the future. For example, changes in exchange rates negatively affected our revenues as expressed in U.S. dollars for the quarter ended April 30, 2022, and we expect our revenues as expressed in U.S. dollars to be negatively effected by changes in exchange rates for our fiscal year ending January 31, 2023 as well. Further, we have experienced and will continue to experience fluctuations in our net income as a result of transaction gains or losses related to revaluing certain current asset and current liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded.

We engage in the hedging of our foreign currency transactions and may, in the future, hedge selected significant transactions or net monetary exposure positions denominated in currencies other than the U.S. dollar. The use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place. Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effective hedges with such instruments.

If we are unable to implement and maintain effective internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports.

As a public company, we are required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. Section 404 of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act) requires that we evaluate and determine the effectiveness of our internal controls over financial reporting and provide a management report on internal controls over financial reporting. The Sarbanes-Oxley Act also requires that our management report on internal controls over financial reporting be attested to by our independent registered public accounting firm.

We must continue to monitor and assess our internal control over financial reporting. If in the future we have any material weaknesses, we may not detect errors on a timely basis and our financial statements may be materially misstated. Additionally, if in the future we are unable to comply with the requirements of the Sarbanes-Oxley Act in a timely manner, are unable to assert that our internal controls over financial reporting are effective, identify material weaknesses in our internal controls over financial reporting, or if our independent registered public accounting firm


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is unable to express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could be adversely affected, and we could become subject to investigations by the NYSE, the SEC, or other regulatory authorities, which could require additional financial and management resources.

We have broad discretion in the use of our cash balances and may not use them effectively.

We have broad discretion in the use of our cash balances and may not use them effectively. The failure by our management to apply these funds effectively could adversely affect our business and financial condition. Pending their use, we may invest our cash balances in a manner that does not produce income or that loses value. Our investments may not yield a favorable return to our investors and may negatively impact the price of our Class A common stock.


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Risks Related to Our Intellectual Property

We have been and may in the future be sued by third parties for alleged infringement of their proprietary rights or misappropriation of intellectual property, and we may suffer damages or other harm from such proceedings.

There is considerable patent and other intellectual property development activity in our industry. Our competitors, as well as a number of other entities and individuals including so-called non-practicing entities, or NPEs, may own or claim to own intellectual property relating to our solutions. From time to time, third parties may claim that we are infringing upon their intellectual property rights or that we have misappropriated their intellectual property. For example, since January 2017, we have been defending against assertions of trade secret misappropriation made by our competitors, Medidata and IQVIA, as described in note 13 of the notes to our condensed consolidated financial statements. As competition in our market grows, the possibility of patent infringement and other intellectual property claims against us increases. In the future, we expect others to claim that our solutions and underlying technology infringe or violate their intellectual property rights. We may be unaware of the intellectual property rights that others may claim cover some or all of our technology or services. Any claims or litigation have caused and in the future could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our services, or require that we comply with other unfavorable terms. We may also be obligated to indemnify our customers or business partners or pay substantial settlement costs, including royalty payments, in connection with any such claim or litigation and to obtain licenses, modify applications, or refund fees, which could be costly. Any litigation regarding our intellectual property could be costly and time-consuming and divert the attention of our management and key personnel from our business operations even if we were to ultimately prevail in such litigation.

Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.

Our success and ability to compete depend in part upon our intellectual property. As of April 30, ~~2021,~~2022, we have filed numerous domestic and foreign patent applications and have been issued 3548 U.S. patents and 11 international patents. We also rely on copyright, trade secret and trademark laws, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our intellectual property rights. However, the steps we take to protect our intellectual property rights may be inadequate.

In order to protect our intellectual property rights, we may be required to spend significant resources to maintain, monitor and protect these rights. Litigation brought to protect and enforce our intellectual property rights could be costly, time-consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Negative publicity related to a decision by us to initiate such enforcement actions against a customer or former customer, regardless of its accuracy, may adversely impact our other customer relationships or prospective customer relationships, harm our brand and business and could cause the market price of our Class A common stock to decline. Our failure to secure, protect and enforce our intellectual property rights could adversely affect our brand and our business.


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Risks Related to Our Status as a Public Benefit Corporation and Ownership of Our Class A Common Stock

Our conversion to a Delaware public benefit corporation may not result in the benefits that we anticipate, requires our directors to balance the interest of stockholders with other interests, and may subject us to legal uncertainty and other risks.

On February 1, 2021, after approval by our stockholders, we became a Delaware public benefit corporation (PBC). There are a very limited number of publicly traded PBCs, we are the first publicly traded company to convert to a PBC, and we are the largest publicly traded company, as measured by revenue or market capitalization, to operate as a PBC. As a PBC, we have unique legal obligations. We are required to adopt and include in our certificate of incorporation a public benefit purpose that is intended to have positive effects on a category of persons, entities or communities other than stockholder financial interest. Our public benefit purpose is to provide products and services that are intended to help make the industries we serve more productive, and to create high-quality employment opportunities in the communities in which we operate. Further, as a PBC, our Board is required to balance our stockholders' pecuniary (financial) interests, the best interests of those materially affected by our conduct, and pursuit of our public benefit purpose. We have identified those materially affected by our conduct (which we refer to


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as stakeholders) as including our customers, our employees, our partners, and the communities in which we operate.

We believe that operating as a PBC is beneficial to our business and consistent with the long-term interests of stockholders, but the benefits we anticipate from operating as a PBC may not materialize within the timeframe we expect or at all, or there may be negative effects. Further, we may be unable or slow to achieve the public benefits we have identified or we may make balancing determinations that are ultimately harmful to our business or to stockholders, which could adversely affect our reputation, business, financial condition, and results of operations and cause our stock price to decline.

In the event of a conflict between the interests of our stockholders, our stakeholders, and our public benefit purpose, our directors must only make an informed and disinterested decision, and not such that no person of ordinary, sound judgment would approve. Our directors have significant latitude under this standard and there is no guarantee that a conflict would be resolved in favor of our stockholders. This balancing obligation may allow our directors to make decisions that they could not have made pursuant to the fiduciary duties applicable prior to our PBC conversion, and such decisions may not maximize short-term stockholder value. For instance, in a sale of control transaction, our board of directors would be required to consider and balance the factors listed above and might choose to accept an offer that does not maximize short-term stockholder value due to its consideration of other factors.

Further, there is limited legal precedent or guidance regarding how to administer our obligation to balance the interests of stockholders, stakeholders, and the pursuit of our public benefit purpose. While we expect that, in large part, traditional Delaware corporation law principles and the application of those principles in case law—including those related to self-dealing, conflicts of interest, and the application of the business judgment rule—will continue to apply with respect to Delaware PBCs, there is currently limited case law involving PBCs, which may create legal uncertainty or additional litigation risk until additional case law develops. Stockholders of a Delaware PBC (if they, individually or collectively, own at least the lesser of two percent of the company's outstanding shares or shares with a market value of at least $2 million) may file suit to enforce the balancing obligation. Any such lawsuit might be a distraction to our management and board of directors, and could be costly, which may have an adverse impact on our financial condition and results of operations.

As a PBC, we are required to disclose to stockholders a report at least biennially on that includes our assessment of our success in achieving our specific public benefit purpose, and we have committed to providing this report annually and making it publicly available. If we are not timely or are unable to provide this report, or if the report is not viewed favorably, our reputation and status as a public benefit corporation may be harmed.

While we do not view the additional reporting obligations of a PBC to be onerous, Delaware’s PBC statute may be amended in the future to require more explicit or burdensome periodic reporting requirements and that could increase our expenses. In addition, if the public perceives that we are not successful in our public benefit purpose, or that our pursuit of our public benefit purpose is having a negative effect on the financial interests of our stockholders, that perception could negatively affect our reputation, which could adversely affect our business and results of operations.

Our Class A common stock price has been and will likely continue to be volatile.

The trading price of our Class A common stock has been and will likely continue to be volatile for the foreseeable future. In addition, the trading prices of the securities of technology companies have been highly volatile.


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Accordingly, the market price of our Class A common stock is likely to be subject to wide fluctuations in response to numerous factors, many of which are beyond our control. Uncertain macroeconomic and geopolitical factors in recent periods, including as a result of the Russian invasion of Ukraine, continuing uncertainty surrounding the effects of COVID-19, and inflationary pressures, has led to volatility in the stock market. As a result, our stock price has declined significantly in recent periods, and we expect the trading price of our Class A common stock will likely continue to be volatile for the foreseeable future. In addition to those risks described in this “Risk Factors” section, other factors could impact the value of our common stock, including:

•fluctuations in the valuation of companies perceived by investors to be comparable to us, such as high-growth or cloud companies, or in valuation metrics, such as our price to revenues ratio;

•overall performance of the stock market;

•changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-term prospects of our business, and how those results compare to securities analyst expectations, including whether those results fail to meet, exceed, or significantly exceed securities analyst expectations;


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•changes in the forward-looking estimates of our financial, operating, or other metrics, how those estimates compare to securities analyst expectations, or changes in recommendations by securities analysts that follow our Class A common stock;

•announcements of customer additions and customer cancellations or delays in customer purchases;

•the net increase in the number of customers, either independently or as compared to published expectations of industry, financial or other analysts that cover us;

•announcements by us or by our competitors of technological innovations, new solutions, enhancements to services, strategic alliances or significant agreements;

•announcements by us or by our competitors of mergers or other strategic acquisitions or rumors of such transactions;

•the economy as a whole and market conditions within our industry and the industries of our customers;

•macroeconomic and geopolitical factors and instability and volatility in the global financial ~~markets, including uncertainty surrounding~~markets;

•rising interest rates and future monetary policy changes in the ~~effects of COVID-19;~~United States and globally;

•the operating performance and market value of other comparable companies;

•securities or industry analysts downgrading our Class A common stock or publishing inaccurate or unfavorable research about our business;

•trading activity by directors, executive officers (in particular our Chief Executive Officer who holds a significant portion of our outstanding common stock), and other significant stockholders, or the perception in the market that the holders of a large number of shares intend to sell their shares; and

•any other factors discussed herein.

In addition, if the market for technology stocks or the stock market in general experiences uneven investor confidence, the market price of our Class A common stock could decline for reasons unrelated to our business, operating results or financial condition. The market price of our Class A common stock might also decline in reaction to events that affect other companies within, or outside, our industry even if these events do not directly affect us. Some companies that have experienced volatility in the trading price of their stock have been the subject of securities class action litigation. If we are the subject of such litigation, it could result in substantial costs and a diversion of our management’s attention and resources.

The dual-class structure of our common stock has the effect of concentrating voting control with certain individuals and their affiliates, which will limit or preclude the ability of our investors to influence corporate matters and could depress the market value of our Class A common stock.

Our Class B common stock has ten votes per share, and our Class A common stock has one vote per share. As of April 30, ~~2021,~~2022, our founder and Chief Executive Officer, Peter Gassner, holds approximately ~~45.9%~~45.7% of the voting power of our outstanding capital stock and holders of our Class B common stock hold approximately ~~51.7%~~51.3% of the voting power of our outstanding capital stock in the aggregate. Holders of our Class B common stock collectively


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control a majority of the combined voting power of our common stock and, assuming no material sales of such shares, will be able to control matters submitted to our stockholders for approval until October 15, 2023, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction. This concentrated control will limit or preclude our investors’ ability to influence corporate matters while the dual class structure is in effect. In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock or may adversely affect the market price of our Class A common stock.

S&P Dow Jones and FTSE Russell have announced changes to their eligibility criteria for inclusion of shares of public companies with multiple classes of stock on certain indices, including the S&P 500. While this has not affected the inclusion of Veeva’s Class A common stock in these indices to date, eligibility criteria of these indices and others may change in the future. In addition, several stockholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual-class structure of our common stock may prevent the inclusion of our Class A common stock in such indices and may cause stockholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for our Class A common stock. Any actions or publications by stockholder advisory firms or other third-party ratings agencies critical


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of our corporate governance practices, capital structure, or other business practices could also adversely affect the value of our Class A common stock. In addition, several stockholder advisory firms have announced their opposition to the use of multiple class structures, and have updated their policies, effective in calendar 2023, to provide for no-vote recommendations against directors of companies with multiple class structures.

We do not intend to pay dividends on our capital stock for the foreseeable future, so any returns will be limited to changes in the value of our Class A common stock.

We have never declared or paid any cash dividends on our capital stock. We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, our ability to pay cash dividends on our capital stock may be prohibited or limited by the terms of any future debt financing arrangement. Any return to stockholders will therefore be limited to the increase, if any, of the price of our Class A common stock.

Provisions in our certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the market price of our Class A common stock.

Our restated certificate of incorporation and amended and restated bylaws contain provisions that could depress the market price of our Class A common stock by acting to discourage, delay, or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions among other things:

•provide for a dual-class common stock structure until October 15, 2023, which gives our Chief Executive Officer and certain of our holders and their respective affiliates the ability to control the outcome of all matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A and Class B common stock;

•permit our board of directors to establish the number of directors;

•provide that directors may only be removed with the approval of 66-2/3% of our stockholders;

•require super-majority voting to amend some provisions in our restated certificate of incorporation and amended and restated bylaws;

•authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;

•eliminate the ability of our stockholders to call special meetings of stockholders;

•require our board of directors to consider and balance our stockholders' pecuniary (financial) interests, the best interests of those materially affected by our conduct, and the pursuit of our public benefit purpose, which may, in turn, allow our board of directors to make a decision about a change of control transaction that does not maximize short-term stockholder value;


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•prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;

•provide that the board of directors is expressly authorized to make, alter, or repeal our amended and restated bylaws; and

•establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.

In addition, Section 203 of the Delaware General Corporation Law may discourage, delay, or prevent a change in control of our company. Section 203 imposes certain restrictions on merger, business combinations, and other transactions between us and holders of 15% or more of our common stock.

Our certificate of incorporation and bylaws provide for exclusive forums for certain disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law or any action asserting a claim against us that is governed by the internal affairs doctrine. Our bylaws also provide that, unless we


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consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the sole and exclusive forum for any action asserting a claim arising pursuant to the Securities Act, such a provision known as a “Federal Forum Provision.” Any person or entity purchasing or otherwise acquiring any interest in our shares of capital stock shall be deemed to have notice of and consented to these provisions.

These choice of forum provisions may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees and may discourage these types of lawsuits. Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation or bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition.


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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

a)Sales of Unregistered Securities

None.

b)Use of Proceeds from Public Offerings of Common Stock

None.

c)Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.


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ITEM 6. EXHIBITS.

Exhibits

Exhibit
Number

Exhibit Description

Incorporated by Reference

Filed

Exhibit
Number

Exhibit Description

Incorporated by Reference

Filed

Form

File No.

Exhibit

Filing Date

Herewith

Form

File No.

Exhibit

Filing Date

Herewith

3.1

Restated Certificate of Incorporation of Veeva Systems Inc.

8-K

001-36121

3.1

2/1/2021

3.1

Restated Certificate of Incorporation of Veeva Systems Inc.

8-K

001-36121

3.1

6/28/2021

3.2

Amended and Restated Bylaws of Veeva Systems Inc.

8-K

001-36121

3.1

3/22/2021

3.2

Amended and Restated Bylaws of Veeva Systems Inc.

8-K

001-36121

3.2

6/28/2021

31.1

Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.1

Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2

Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2

Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1†

Certification of Chief Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.

32.1†

Certification of Chief Executive Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.

32.2†

Certification of Chief Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.

32.2†

Certification of Chief Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.

101.INS

XBRL Instance Document.

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Schema Linkbase Document.

101.SCH

XBRL Taxonomy Schema Linkbase Document.

101.CAL

XBRL Taxonomy Calculation Linkbase Document.

101.CAL

XBRL Taxonomy Calculation Linkbase Document.

101.DEF

XBRL Taxonomy Definition Linkbase Document.

101.DEF

XBRL Taxonomy Definition Linkbase Document.

101.LAB

XBRL Taxonomy Labels Linkbase Document.

101.LAB

XBRL Taxonomy Labels Linkbase Document.

101.PRE

XBRL Taxonomy Presentation Linkbase Document.

101.PRE

XBRL Taxonomy Presentation Linkbase Document.

104

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

104

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

† The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Veeva Systems Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		Veeva Systems Inc.

Dated:	June ~~4, 2021~~3, 2022	By:	/s/ BRENT BOWMAN
			Brent Bowman Chief Financial Officer (Principal Financial Officer)

Dated:	June ~~4, 2021~~3, 2022	By:	/s/ MICHELE O’CONNOR
			Michele O’Connor Chief Accounting Officer (Principal Accounting Officer)


Veeva Systems Inc. \| Form 10-Q			63


	Payments due by period
	Total		Less than 1 year		1-3 Years		3-5 Years		More than 5 years

	(in thousands)
Salesforce.com commitments	$	35,390	7,380		—		28,010		—
Operating lease obligations	68,057		9,632		22,051		14,768		21,606
Finance lease obligations	96		96		—		—		—
Total	$	103,543	$	17,108	$	22,051	$	42,778	$	21,606