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What changed in VEEVA SYSTEMS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of VEEVA SYSTEMS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+384 added−430 removedSource: 10-K (2023-03-30) vs 10-K (2022-03-30)

Top changes in VEEVA SYSTEMS INC's 2023 10-K

384 paragraphs added · 430 removed · 293 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur life sciences customers range from the largest global pharmaceutical and biotechnology companies such as Bayer AG, Boehringer Ingelheim GmbH, Eli Lilly and Company, Gilead Sciences, Inc., Merck Sharp & Dohme Corp., and Novartis Pharma AG, to emerging growth pharmaceutical and biotechnology companies, including Alkermes Inc., Alnylam Pharmaceuticals, Inc., bluebird bio, Inc., Idorsia Pharmaceuticals Ltd, and Moderna Therapeutics Inc.
Biggest changeFor an explanation of how we define current customers, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Components of Results of Operations.” We deliver solutions to companies throughout the life sciences industry, including pharmaceutical, biotechnology, and medical device companies, contract sales organizations, and contract research organizations. 4 Veeva Systems Inc. | Form 10-K Table of Contents Our life sciences customers range from the largest global pharmaceutical and biotechnology companies such as Bayer AG, Boehringer Ingelheim GmbH, Eli Lilly and Company, Gilead Sciences, Inc., Merck Sharp & Dohme Corp., and Novartis Pharma AG, to emerging growth pharmaceutical and biotechnology companies, including Alkermes Inc., Alnylam Pharmaceuticals, Inc., bluebird bio, Inc., Idorsia Pharmaceuticals Ltd, and Moderna Therapeutics Inc.
For financial reporting purposes, revenues associated with our Veeva Commercial 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.
For financial reporting purposes, revenues associated with our Veeva Development Cloud, Veeva RegulatoryOne, and Veeva QualityOne solutions are classified as “R&D Solutions” revenues, and revenues associated with our Veeva Commercial Cloud and Veeva Claims solutions are classified as “Commercial Solutions” revenues.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on the Investors portion of our website at http://ir.veeva.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 12 Veeva Systems Inc. | Form 10-K Table of Contents
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge on the Investors portion of our website at http://ir.veeva.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 8 Veeva Systems Inc. | Form 10-K Table of Contents
We also require role-based security and security awareness training and have defined security incident response processes. Privacy Program Veeva maintains a global privacy program aligned to applicable laws such as the California Consumer Privacy Act (CCPA), the California Privacy Rights Act (CPRA), the European Union’s General Data Protection Regulation (GDPR), and the U.S. Health Insurance Portability and Accountability Act (HIPAA).
We also require role-based security and security awareness training and have defined security incident response processes. Privacy Program Veeva maintains a global privacy program aligned to applicable laws such as the European Union’s General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), and the U.S. Health Insurance Portability and Accountability Act (HIPAA).
For example, see the description of our current litigations in note 15 of the notes to our consolidated financial statements. Corporate Information Our website address is http://www.veeva.com.
For example, see the description of our current litigations in note 14 of the notes to our consolidated financial statements. Corporate Information Our website address is http://www.veeva.com.
In large life sciences companies, the R&D and commercial business functions commonly have separate technology and business decision makers. Accordingly, we market and sell our solutions to align with the distinct characteristics of those decision makers.
Sales and Marketing We sell our solutions through our direct sales organization. In large life sciences companies, the R&D and commercial business functions commonly have separate technology and business decision makers. Accordingly, we market and sell our solutions to align with the distinct characteristics of those decision makers.
Our business consulting and professional services offerings compete with a range of professional services firms. 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.
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.
Our customers may also choose to use cloud-based applications or platforms that are not life sciences specific—such as Box, Inc., Amazon Web Services, or Microsoft—for certain of the functions our applications provide. 10 Veeva Systems Inc. | Form 10-K Table of Contents We sell certain of our Veeva Vault applications to companies outside the life sciences industry.
Our customers may also choose to use cloud-based applications or platforms that are not life sciences specific—such as Salesforce, Inc., Box, Inc., Amazon Web Services, or Microsoft—for certain of the functions our applications provide. We sell certain of our Veeva Vault applications to companies outside the life sciences industry.
We offer the following professional services: • implementation and deployment planning and project management; • requirements analysis, solution design and configuration; • systems environment management and deployment services; Veeva Systems Inc. | Form 10-K 7 Table of Contents • services focused on advancing or transforming business and operating processes related to Veeva solutions; • technical consulting services related to data migration and systems integrations; • training on our solutions; and • ongoing managed services, such as outsourced systems administration.
We offer the following professional services: • implementation and deployment planning and project management; • requirements analysis, solution design and configuration; • systems environment management and deployment services; • services focused on advancing or transforming business and operating processes related to Veeva solutions; • technical consulting services related to data migration and systems integrations; • training on our solutions; and • ongoing managed services, such as outsourced systems administration.
Our Industry Cloud Solutions for Life Sciences Our industry cloud solutions for the life sciences industry are grouped into two major areas—Veeva Commercial Cloud and Veeva Development Cloud—and are designed to address pharmaceutical, biotechnology, and medical device companies’ most pressing strategic needs in their commercial and R&D operations.
Our Industry Cloud Solutions for Life Sciences Our industry cloud solutions for the life sciences industry are grouped into two major product families—Veeva Development Cloud and Veeva Commercial Cloud—and are designed to address pharmaceutical, biotechnology, and medical devices and diagnostics (MedTech) companies’ most pressing strategic needs in their commercial and R&D operations.
We also deliver solutions to companies in the CP&C industries. Our Human Capital Resources As of January 31, 2022, we had a world-wide employee population of 5,482 employees, up by 976 from the previous year. Our employees in the United States are not represented by a labor union; however, in certain foreign locations, local workers’ councils represent our employees.
We also deliver solutions to companies in the CP&C industries. Our Human Capital Resources As of January 31, 2023, we had 6,744 employees worldwide, up by 1,262 from the previous year. Our employees in the United States are not represented by a labor union; however, in certain foreign locations, local workers’ councils represent our employees.
Veeva Commercial Cloud includes solutions for the sales, medical affairs, and marketing functions of a life sciences company: • Veeva CRM and Veeva Medical CRM enable customer-facing employees—including life sciences sales representative and medical science liaisons—to manage, track, and optimize engagement with healthcare professionals with a single, integrated solution.
Veeva Commercial Cloud includes solutions for the sales, medical affairs, and marketing functions of a life sciences company: Our software offerings include: • Veeva CRM suite enables customer-facing employees at pharmaceutical and biotechnology companies—including sales representatives and medical science liaisons—to manage, track, and optimize engagement with healthcare professionals with a single, integrated solution.
In this segment of our business, we compete with solutions such as those offered by OpenText, Microsoft, Sparta Systems Inc. (recently acquired by Honeywell International Inc.), EtQ Management Consultants, LLC, Oracle, and Box, and custom-built software developed by third-party vendors or in-house by our potential customers.
In this segment of our business, we compete with solutions such as those offered by OpenText, Microsoft, Honeywell, EtQ Management Consultants, LLC, Oracle, and Box, and custom-built software developed by third-party vendors or in-house by our potential customers. Our business consulting and professional services offerings compete with a range of professional services firms.
Veeva Systems Inc. | Form 10-K 11 Table of Contents Despite our efforts to protect our proprietary technology and our intellectual property rights, unauthorized parties may attempt to copy or obtain and use our technology to develop applications with the same functionality as our application.
Despite our efforts to protect our proprietary technology and our intellectual property rights, unauthorized parties may attempt to copy or obtain and use our technology to develop applications with the same functionality as our application.
Veeva Vault can be deployed one application at a time or as an integrated solution with multiple applications that enables our customers to unify and manage important documents and related data in a single, global system. Veeva Development Cloud solutions include: • Veeva Digital Trials Platform advances clinical trial execution by providing a complete and connected technology ecosystem.
Veeva Vault can be deployed one application at a time or as an integrated solution with multiple applications that enable customers to unify and manage important documents and related data in a single global system. 2 Veeva Systems Inc. | Form 10-K Table of Contents • Veeva Vault Clinical advances clinical trial execution by providing a complete and connected technology ecosystem.
The table below provides a summary of our issued patents and pending patent applications as of January 31, 2022: Issued U.S. patents (expiring between May 2027 and January 2039) 45 Issued international patents (expiring between April 2025 and June 2037) 11 U.S. and international pending patent applications 57 Our patents and patent applications cover technology within the following of our product categories: Veeva Commercial Cloud, Veeva Vault Platform, Veeva Vault Clinical, Veeva Vault RIM, Veeva Vault CDMS, and Veeva Vault Safety.
The table below provides a summary of our issued patents and pending patent applications as of January 31, 2023: Issued U.S. patents (expiring between May 2027 and January 2039) 59 Issued international patents (expiring between April 2025 and June 2037) 13 U.S. and international pending patent applications 65 Our patents and patent applications cover technology within our Veeva Development Cloud and Veeva Commercial Cloud product families.
Based on customer feedback and needs, we focus our efforts on developing new solutions functionality, applications, and core technologies and further enhancing the usability, functionality, reliability, performance, and flexibility of existing solutions and applications. Sales and Marketing We sell our solutions through our direct sales organization.
Research and Development Our R&D organization is responsible for the design, development, and testing of our solutions and applications. Based on customer feedback and needs, we focus our efforts on developing new solutions functionality, applications, and core technologies and further enhancing the usability, functionality, reliability, performance, and flexibility of existing solutions and applications.
We utilize third parties to provide our computing infrastructure and manage the infrastructure on which our solutions operate. For example, for Veeva CRM and certain of our multichannel CRM applications, we utilize the hosting infrastructure provided by salesforce.com. For our Veeva Vault applications, Veeva Network applications, and certain other Veeva Commercial Cloud applications, we utilize Amazon Web Services.
For example, for Veeva CRM and certain of our multichannel CRM applications, we currently utilize the hosting infrastructure provided by Salesforce, Inc. For our Veeva Vault applications and certain other Veeva Commercial Cloud applications, we utilize Amazon Web Services.
We believe that we generally compete favorably on the basis of these factors. Intellectual Property We rely on a combination of patents, trade secrets, copyrights and trademarks, as well as contractual protections, to establish and protect our intellectual property rights. We have developed a process for seeking patent protection for our technology innovations.
We believe that we generally compete favorably on the basis of these factors. Veeva Systems Inc. | Form 10-K 7 Table of Contents Intellectual Property We rely on a combination of patents, trade secrets, copyrights and trademarks, as well as contractual protections, to establish and protect our intellectual property rights.
Our systems integrator partners include Accenture, Cognizant Technology Solutions, Deloitte Consulting, and other life sciences specialty firms. Our Customers As of January 31, 2022, we served 1,205 customers.
Our systems integrator partners include Accenture, Cognizant, Tata Consultancy Services (TCS), and other life sciences specialty firms. Our Customers As of January 31, 2023, we served 1,388 customers.
The principal such competitor for our Veeva Commercial Cloud applications is IQVIA Inc., which offers a CRM application built on the Salesforce Platform and other applications. Our data and data analytics products, including Veeva OpenData, Veeva Link, Veeva Crossix, and Veeva Data Cloud, compete with IQVIA, Ipsos Group S.A., Definitive Health Corp., and smaller data and data analytics providers.
The principal such competitor for our Veeva Commercial Cloud applications is IQVIA Holdings Inc., which offers a CRM application built on the Salesforce platform, various data products, and other applications that compete with our products.
We also offer a range of benefits to our employees, including comprehensive healthcare and other wellness programs. We believe our compensation and benefits programs are competitive.
We also offer a range of benefits to our employees, including comprehensive healthcare and other wellness programs. We believe our compensation and benefits programs are competitive. While we experience intense competition for talent, we believe we have been effective at attracting and retaining talented employees.
Engagements typically focus on a particular customer success initiative, strategic analysis, or business process change like commercial strategy, digital engagement, commercial content management, field optimization, and commercial insights and analytics. Expanding from our current commercial focus, Business Consulting is adding services to support the R&D functions of life sciences companies as well.
Engagements typically focus on a particular customer success initiative, strategic analysis, or business process change like commercial strategy, digital engagement, commercial content management, field optimization, and commercial insights and analytics. Professional Services and Support We offer professional services to help customers maximize the value of our solutions.
This allows us to develop targeted solutions, quickly adapt to regulatory changes, and incorporate highly relevant enhancements into our existing solutions at a rapid pace. Our goal is to become the most strategic technology partner to the life sciences industry and achieve long-term leadership with our solutions that support the R&D and commercial functions of life sciences companies.
Our goal is to become the most strategic technology partner to the life sciences industry and achieve long-term leadership with our solutions that support the R&D and commercial functions of life sciences companies.
Technology Infrastructure and Operations Our solutions utilize a pod-based architecture that allows for scalability, operational simplicity, and security. Our products are hosted in data centers located in the United States, the United Kingdom, the European Union, Japan, and South Korea. Our products used only within China are hosted in data centers located in China.
Technology Infrastructure and Operations Our products are hosted in data centers located in the United States, the United Kingdom, the European Union, Japan, and South Korea. Our products used only within China are hosted in data centers located in China. We utilize third parties to provide our computing infrastructure and manage the infrastructure on which our solutions operate.
We enable multiple customers to share the same version of our solutions while securely partitioning their respective data. Portions of our multichannel customer relationship management applications are built on the Salesforce Platform of salesforce.com inc. Our Veeva Vault applications, Veeva Network, and portions of our other Commercial Cloud applications are built upon our own proprietary platforms.
We enable multiple customers to share the same version of our solutions while Veeva Systems Inc. | Form 10-K 5 Table of Contents securely partitioning their respective data. Portions of our multichannel customer relationship management applications currently utilize the Salesforce platform of Salesforce, Inc.
Our solutions span cloud software, data, and business consulting and are designed to meet the unique needs of our customers and their most strategic business functions—from research and development (R&D) to commercialization. Our solutions help life sciences companies develop and bring products to market faster and more efficiently, market and sell more effectively, and maintain compliance with government regulations.
ITEM 1. BUSINESS. Overview Veeva is the leading provider of industry cloud solutions for the global life sciences industry. Our offerings span cloud software, data, and business consulting and are designed to meet the unique needs of our customers and their most strategic business functions—from research and development (R&D) to commercialization.
We have not experienced any work stoppages, and we consider our relations with our employees to be very good. Our workforce is diverse in many respects.
We have not experienced any work stoppages, and we consider our relations with our employees to be very good. Our workforce is diverse in many respects. As of January 31, 2023, 44% of our global employee population self-identified as female and approximately 39% of our U.S. workforce self-identified as members of underrepresented racial or ethnic groups.
Veeva Vault’s unique ability to handle content and data allows us to build content and data-centric applications to help customers streamline end-to-end business processes and eliminate manual processes and siloed systems.
Veeva Development Cloud includes application suites for the clinical, regulatory, quality, and safety functions of life sciences companies, all built on our proprietary Veeva Vault platform . Veeva Vault’s unique ability to handle content and data allows us to build content and data-centric applications to help customers streamline end-to-end business processes and eliminate manual processes and siloed systems.
Certain of our other applications rely on technology platforms provided by Amazon Web Services. For example, Veeva Nitro, our commercial data warehouse application, utilizes Amazon Redshift, and Veeva CRM Engage Meeting utilizes Zoom. Quality and Compliance Program Veeva maintains a quality management system certified to ISO9001 to ensure process controls conform to established industry standards across our regulated product offerings.
For example, our commercial data warehouse application utilizes Amazon Redshift and our digital engagement application utilizes Zoom. Quality and Compliance Program Veeva maintains a quality management system certified to ISO9001 to ensure process controls conform to established industry standards for our cloud software offerings that are subject to good practice regulations for the life sciences industry.
We are building a team that is working with early customers to accelerate their capabilities and improve business processes. Professional Services and Support We offer professional services to help customers maximize the value of our solutions. Our service teams possess industry expertise, project management capabilities, and deep technical acumen that we believe our customers highly value.
Our service teams possess industry expertise, project management capabilities, and deep technical acumen that we believe our customers highly value. Our professional services teams work with our systems integrator partners to deliver projects.
Veeva Commercial Cloud is a suite of software, data and analytics solutions built specifically for life sciences companies to more efficiently and effectively commercialize their products.
Applications include solutions for managing quality content, harmonizing quality processes, and simplifying employee qualification. The unification of quality processes and systems increases operational efficiency, enables continuous improvement, and drives compliance. Veeva Commercial Cloud is a product family comprised of software and data solutions built specifically for life sciences companies to more efficiently and effectively commercialize their products.
The Veeva Vault Clinical Suite includes: • Veeva Vault Clinical Data Management Suite (CDMS) helps sponsors and CROs design and run trials with tools to speed the build process and eliminate manual steps. • Veeva Vault EDC is an electronic data capture application that enables complex, multi-arm adaptive trials and mid-study design amendments without downtime.
The platform is comprised of our clinical suite and applications for clinical research sites and patient engagement. • Veeva Clinical Data Management Suite (CDMS) helps sponsors and CROs design and run trials with tools to speed the build process and eliminate manual steps.
Customer success is one of our core values, and our focus on it has allowed us to deepen and expand our strategic relationships with customers over time. Because of our industry focus, we have a unique, in-depth perspective into the needs and best practices of life sciences companies and clinical research sites.
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. Customer success is one of our core values, and our focus on it has allowed us to deepen and expand our strategic relationships with customers over time.
Veeva Vault Payments is an application for use with Vault CTMS that helps manage the payment and reimbursement process to clinical research sites . • Veeva Site Connect automates the flow of clinical trial information between Veeva Vault clinical applications used by sponsors and CROs, and clinical research sites using Veeva SiteVault for better collaboration and faster clinical trials. • Veeva Site and Patient Engagement Applications include our applications intended to make clinical trial participation easier for patients, and streamline study execution for research sites and trial sponsors.
Veeva Clinical Operations Suite offers applications s u ch as Veeva Vault eTMF , an electronic trial master file application, Veeva Vault CTMS for clinical trial management, and solutions for automating the flow of clinical trial information between sponsors, CROs, and clinical research sites and for better collaboration and faster clinical trials. • Our suite of applications for clinical research sites and patient engagement makes clinical trial participation easier for patients and streamlines study execution for research sites and trial sponsors.
In addition to design requirements, Veeva Systems Inc. | Form 10-K 9 Table of Contents our solutions must be thoroughly tested to comply with the regulations that apply to electronic record keeping systems for the life sciences industry, which include: Regulation Regulation Description 21 CFR 820.75 U.S. FDA device regulation on system validation 21 CFR 211.68 U.S.
Robust audit trail tracking, compliant electronic signature capture, data encryption, and secure access controls are required for these software offerings, and they must be thoroughly tested for compliance with applicable life sciences industry regulations, which include: Regulation Regulation Description 21 CFR 820.75 U.S. FDA device regulation on system validation 21 CFR 211.68 U.S.
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ITEM 1. BUSINESS. Overview 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.
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Because of our industry focus, we have a unique, in-depth perspective into the needs and best practices of life sciences companies and clinical research sites. This allows us to develop targeted solutions, quickly adapt to regulatory changes, and incorporate highly relevant enhancements into our existing solutions at a rapid pace.
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Executing in the Veeva Way Fundamental to our business model is what we call The Veeva Way . The Veeva Way is key to our disciplined approach to achieve our goal of long-term leadership in each of the product markets we serve. We start with a focus on addressing clear and correct target markets .
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This includes solutions for electronic data capture; aggregating, cleaning, and transforming clinical data; and randomization and trial supply management.
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Those are large product markets in which the problem being addressed by our solution is strategic to the businesses of our customers and in which we believe Veeva can become the leader over the long-term if we execute well.
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These offerings include applications that allow sites to maintain and access study documents electronically, to securely exchange information with sponsors and CROs, and to enable electronic processing of consents and assessments of clinical trial participants. • Veeva Vault RIM is a suite of applications that provides fully integrated regulatory information management capabilities on a single cloud platform.
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We embrace the concept of running to complexity , an approach in which we strive to solve the most important and challenging information technology problems our customers face.
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These offerings include applications that enable life sciences companies to manage, track, and report product and registration information and to facilitate content planning, authoring, publishing, and archiving of regulatory submissions to healthcare authorities. • Veeva Vault Safety is a suite of applications that unifies systems and processes to enable proactive patient safety.
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We also believe that addressing such problems has the potential for broader societal benefits, for instance, by making the therapeutic development process more efficient. 2 Veeva Systems Inc. | Form 10-K Table of Contents We focus on delivering product excellence and innovation .
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These offerings include applications that manage drug safety content as well as the intake, processing, and submission of adverse event data. • Veeva Vault Quality is the life science industry’s only unified suite of applications for managing quality content, processes, and training on a single cloud platform.
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Our product development process begins with assembling and investing in strong product teams focused on building deep, best-in-class software and data solutions for every product market we serve. Through innovative cloud technology, we also aim to eliminate legacy systems, manual processes, and application silos by delivering unified suites of applications and data that support end-to-end business processes.
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In addition, we offer multichannel CRM applications that can enhance and extend our core Veeva CRM and Medical CRM products, providing customers with an end-to-end solution across all key channels, including face-to-face, email, and virtual engagement, live and virtual enterprise events, and field collaboration, all of which support the life sciences industry’s unique commercial business processes and regulatory compliance requirements with highly specialized functionality. • Veeva Vault PromoMats is an end-to-end content and digital asset management (DAM) solution through which life sciences companies can collaborate, review, distribute, and update commercial content and manage assets. • Veeva Vault Medical provides a single, validated source of medical content across multiple channels and geographies with capabilities for medical affairs teams to centralize medical inquiries and content. • Veeva Crossix provides pharmaceutical brands a best-in-class analytics platform to maximize media investments and drive greater marketing effectiveness.
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We strive to forge strong relationships with our customers and focus on customer success . When we enter a new product market, we begin with a small number of early adopter customers. We focus on learning from these early adopters and ensuring that they are successful with our products.
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Our data offerings include: Veeva Systems Inc. | Form 10-K 3 Table of Contents • Veeva OpenData is customer reference data.
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Once successful, our early adopters have developed into vocal advocates, enabling our reference selling model. Finally, our goal is to drive strong growth and profitability through highly efficient, targeted sales and marketing, disciplined product planning, and profitable professional services.
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This includes demographic information, license information and status, specialty information, affiliations, and other key data about healthcare providers (HCP) and organizations that is crucial to customer engagement and compliance. • Veeva Link data applications are built on a modern data platform that combines intelligent software automation with human curation to ensure accuracy and depth.
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Our strong growth and profitability have allowed us to make ongoing investments for continued product innovation in our existing markets and provides us with the resources to invest in new market opportunities.
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This allows Link to generate real-time intelligence across a growing number of areas, including key people, publications, conferences, and digital engagement. • Veeva Compass includes de-identified, longitudinal patient data for the U.S. for a wide range of commercial use cases, including launch planning, patient and HCP segmentation and targeting, and patient journey analytics.
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With Veeva CRM , customers have an end-to-end solution across all key channels, including face-to-face, email, and virtual engagement, that supports the life sciences industry’s unique commercial business processes and regulatory compliance requirements with highly specialized functionality.
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We define underrepresented racial or ethnic groups as those comprising individuals who identify as American Indian, Alaska Native, Asian, Black, African American, Hispanic, Latino, Hawaiian, Pacific Islander, or two or more races. We use a combination of base salary and equity to compensate our employees.
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The following applications can be purchased to enhance and extend Veeva CRM : • Veeva CRM MyInsights provides a tailored CRM user experience that enables field teams to make data-driven decisions for more personalized engagement. • Veeva CRM Approved Email enables the management, delivery, and tracking of emails from field representatives to healthcare professionals, while maintaining regulatory compliance. • Veeva CRM Engage platform enables digital engagement through compliant video meetings, phone calls, contactless in-person interactions, or chat.
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Our Veeva Vault applications and portions of our other Commercial Cloud applications are built upon our own proprietary platforms. We recently announced that we intend to migrate our applications built on the Salesforce platform to our own Veeva Vault platform. Certain of our other applications rely on technology platforms provided by Amazon Web Services.
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It is embedded in Veeva CRM for ease of use, regulatory compliance, and access to important industry-specific processes such as signature requests for samples or medical inquiries.
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Our 6 Veeva Systems Inc. | Form 10-K Table of Contents data and data analytics products, including Veeva OpenData, Veeva Link, Veeva Crossix, and Veeva Compass, compete with IQVIA, Ipsos Group S.A., Definitive Health Corp., and smaller data and data analytics providers.
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The Engage mobile apps help healthcare professionals find the right people from across the industry to communicate and gain resources to better serve their patients. • Veeva CLM provides closed loop marketing capabilities for life sciences sales representatives to present digital marketing content on a mobile device, such as an iPad, during in-person interactions with healthcare professionals. • Veeva Align enables life sciences companies to perform fast, accurate territory alignments.
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We have developed a process for seeking patent protection for our technology innovations.
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Through native integration with Veeva CRM, Veeva Align delivers seamless field collaboration to increase accuracy and minimize manual effort. • Veeva Digital Events includes Veeva CRM Events Management which enables the planning, management, and execution of group meetings with healthcare professionals, and tracks and manages spending to meet transparency reporting requirements.
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Veeva Events Services provides event support for life sciences companies of all sizes in the United States. Veeva Systems Inc. | Form 10-K 3 Table of Contents • Veeva Vault for Commercial Content Management is a unified suite of cloud-based, enterprise content and data management applications.
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The Veeva Vault applications primarily used by the commercial and medical departments of life sciences companies to manage content include: • Veeva Vault PromoMats is an end-to-end content and digital asset management (DAM) solution through which life sciences companies can collaborate, review, distribute, and update commercial content and manage assets.
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Built-in DAM capabilities provide a central hub to store, search, and share compliant content, with workflows for edits and approval, enabling global content management and reuse. • Veeva Vault MedComms enables life sciences companies to streamline the creation, approval, and delivery of medical content and create and maintain a single, validated source of medical content across multiple channels and geographies.
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Integrated medical inquiry management allows medical affairs teams to centralize medical inquiries and content to deliver verbal and written communications to healthcare professionals and patients, including approved answers to questions received through a call center or company website. • Veeva Data and Analytics solutions include: • Veeva Link provides strategic market insights and real-time customer intelligence on key scientific experts, leaders, and influencers.
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Veeva Link associates these global experts with millions of actions, including scholarly publications, clinical trials, medical congresses, associations, and social media activity.
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This helps life sciences companies better understand the full impact of medical activities, identify new experts and HCPs with whom they should connect, and drive more relevant, coordinated engagements. • Veeva Crossix provides pharmaceutical brands a best-in-class analytics platform to maximize media investments and drive greater marketing effectiveness.
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Patented Crossix SafeMine technology connects health data and non-health data, including consumer and media data for U.S. patients, in an accurate, privacy-safe way.
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Crossix DIFA uses that data to enable real-time measurement and optimization of complex, cross-channel media campaigns aimed at patients and healthcare professionals. • Veeva Data Cloud provides longitudinal U.S. patient data for both retail and specialty distribution channels and prescriber data for launch planning, patient segmentation, commercial analytics, artificial intelligence, territory design, and targeting.
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We expect to make our Veeva Data Cloud product for subscription sales data available in early 2023. All of these healthcare data sets support the industry’s need for a modern solution for more precise targeting.
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Veeva Data Cloud is powered by Veeva Crossix privacy-safe processes and an expanding health data set. • Veeva OpenData provides healthcare professional and healthcare organization data that includes demographic information, license information and status, specialty information, affiliations, and other key data that is crucial to customer engagement and compliance.
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In the life sciences industry, this is referred to as customer reference data. Veeva OpenData Explorer gives users the ability to access comprehensive customer reference data through a web-based portal.
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We also offer outsourced data stewardship services to our customers. • Veeva Nitro is a data science and analytics platform that connects commercial data sources for actionable insights and agile decision making.
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With an industry-specific data model and standard data connectors, Nitro enables life sciences companies to more easily unify their most important data sources, such as prescription, sales, formulary, and claims data. • Veeva Network is an industry-specific, customer master software solution that de-duplicates, standardizes, and cleanses healthcare professional and healthcare organization data from multiple systems and data sources to arrive at a single, consolidated customer master record.
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Veeva Network comes pre-configured with a data model that is specific to life sciences as well as country, market, and regional data specifications, within a single system to support global harmonization. 4 Veeva Systems Inc. | Form 10-K Table of Contents Veeva Development Cloud includes application suites for the clinical, regulatory, quality, and safety functions of life sciences companies, all built on our proprietary Veeva Vault Platform.
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The Veeva Digital Trials Platform is comprised of our comprehensive application suites for clinical operations and clinical data management and pre-built connections to our applications for clinical research sites and patient engagement.
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The Veeva Digital Trials Platform includes: • Veeva Vault Clinical Suite transforms clinical operations and clinical data management with the most comprehensive suite of clinical solutions on a single cloud platform. Life sciences companies can increase visibility, streamline end-to-end processes, and improve how sponsors, CROs, and sites work together throughout the clinical trial process.
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Vault Coder codes medical terms quickly and accurately within Vault EDC . • Veeva CDB (clinical database), planned for availability in 2022, is an application for aggregating, cleaning, reporting, and exporting data.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeYou 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. • Unique and uncertain macroeconomic and geopolitical factors, including as a result of the Russian invasion of Ukraine and continuing uncertainty surrounding the effects of COVID-19, 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.
Biggest changeYou 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. • 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. • Our plans to migrate our CRM applications from the Salesforce platform to our own Veeva Vault platform could cause business disruptions for customers, lead to the loss of our customers to competitors, and adversely affect our operating results. • 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. • We expect our longer-term 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. • Unique and uncertain macroeconomic and geopolitical factors, including as a result of worldwide inflationary pressures and rising interest rates, volatility in the financial sector, concerns about a possible domestic or global recession, currency exchange fluctuations and the Russian invasion of Ukraine may cause instability and volatility in the global financial markets and disruptions within the life sciences industry that may negatively impact our business, our financial results, and our stock price. • Difficulty attracting and retaining highly skilled employees could adversely affect our business and efforts to attract and retain such employees may increase our expenses. • If the third-party providers of healthcare professional and healthcare organization data and prescription drug sales data, such as 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. • We are currently being sued by third parties for alleged misappropriation of trade secrets.
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.
If a customer is not satisfied with the quality of work performed by us or a third party or with the solutions delivered, 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.
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; • 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.
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; • 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; • 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.
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.
Risks Related to Our Status as a Public Benefit Corporation and Ownership of Our Class A Common Stock Our status as 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.
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.
If the perceived value of our equity awards declines, including as a result of prolonged 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.
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.
As a PBC, we are required to disclose to stockholders a report at least biennially 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.
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 clinical trial activity in Russia.
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.
While we expect that, in large Veeva Systems Inc. | Form 10-K 33 Table of Contents 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.
While we expect that, in large Veeva Systems Inc. | Form 10-K 29 Table of Contents 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.
It is 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.
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.
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.
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, reductions in spending or headcount, and acquisitions of or business combinations between our customers or other business developments that may result in reductions in user subscriptions.
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 and for certain other use cases.
To date, IQVIA has also restricted customers from uploading any of its data to Veeva Nitro, and has denied use of its data with certain other Veeva applications and for certain other use cases.
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.
As a result, in the initial year of such orders, we recognize more revenue than the fees we invoice for the same period, and in the last year of such orders, we recognize less revenue than the fees we invoice for the same period.
Veeva Systems Inc. | Form 10-K 13 Table of Contents • 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.
Veeva Systems Inc. | Form 10-K 9 Table of Contents • 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.
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.
Our results of operations, including our revenues, gross margin, operating margin, profitability, cash flows, normalized 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.
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.
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 recorded.
Such reductions could negatively impact sales of Veeva CRM and certain of our other Commercial 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.
Such reductions could negatively impact sales of Veeva CRM and certain of our other Commercial Solutions, but we cannot be certain 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.
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.
Such claims and 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.
Any litigation regarding our intellectual property could be 32 Veeva Systems Inc. | Form 10-K Table of Contents 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 litigation regarding our intellectual property could be costly 28 Veeva Systems Inc. | Form 10-K Table of Contents 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.
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.
For example, in 2021, China adopted the Personal Information Protection Law (PIPL), which, together with the Cybersecurity Law (CSL) and the Data Security Law (DSL), has required and will continue to require significant investment and resources to develop our position and provide compliant solutions for our customers.
In our fiscal year ended January 31, 2022, customers outside North America accounted for approximately 42% of our total revenues. A key element of our growth strategy is to further expand our international operations and worldwide customer base.
In our fiscal year ended January 31, 2023, customers outside North America accounted for approximately 42% of our total revenues. A key element of our growth strategy is to further expand our international operations and worldwide customer base.
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.
However, our ability to offer our CRM solutions from data centers located in the listed regions may be limited if Salesforce, Inc. does not operate data centers in the listed regions in the future and we do not contract for such data center services from Alibaba.
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.
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 status as 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.
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.
In the event of a major earthquake, hurricane, or other natural disaster, or catastrophic event such as an actual or threatened public health emergency (e.g., COVID-19), fire, extreme weather event, power loss, telecommunications failure, cyber-attack, war (including the 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.
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.
In addition to our employment of the Salesforce platform through our agreement with Salesforce, Inc., our solutions incorporate or use certain third-party software and software components obtained under licenses from other companies.
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.
If our existing customers do not renew their subscriptions, do not buy additional solutions and user subscriptions from us, renew at lower aggregate fee levels, or early terminate their existing agreements, our business and operating results will suffer. We derive a significant portion of our revenues from the renewal of existing subscription orders.
Compliance with global laws and regulations relating to privacy, 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.
Compliance with global laws, regulations, and customer demand relating to privacy, 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, reputational harm, and reduce demand for our solutions.
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.
We believe that our subscription revenue guidance and normalized billings guidance for the full fiscal year are the best indicators of the momentum of our business or future revenues.
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 eliminates the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years.
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 eliminated the option to deduct research and development expenditures currently and required taxpayers to capitalize and amortize them over five or fifteen years.
Our data and data analytics products, including Veeva OpenData, Veeva Link, Veeva Crossix, and Veeva Data Cloud, compete with IQVIA, Ipsos Group S.A., Definitive Health Corp., and smaller data and data analytics providers.
Our data and data analytics products, including Veeva OpenData, Veeva Link, Veeva Crossix, and Veeva Compass, compete with IQVIA, Ipsos Group S.A., Definitive Health Corp., and smaller data and data analytics 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.
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 are becoming increasingly sophisticated and complex, and generally are not identified until they are launched against a target.
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.
Sales of the Salesforce platform in combination with our Veeva CRM application to additional industries would require the review and approval of Salesforce, Inc. Our inability to freely sell our Veeva CRM application using the Salesforce platform outside of drug makers in the pharmaceutical and biotechnology industries may adversely impact our growth.
The risks we face in doing business internationally that could adversely affect our business, 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; 20 Veeva Systems Inc. | Form 10-K Table of Contents • 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; • difficulties in repatriating funds without adverse tax 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 or limit our ability to fund our operations in Belarus through 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, 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; • 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, including as a result of the Russian invasion of Ukraine.
The risks we face in doing business internationally that could adversely affect our business 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, anti-bribery, and environmental, social and governance matters; • increased financial accounting and reporting burdens and complexities; • difficulties in repatriating funds without adverse tax 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, including if the United States and other countries were to impose more significant general sanctions against Russia or Belarus in response to the continuing conflict in Ukraine, which could ban the use of our products by companies or users in Russia or Belarus; • 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, including as a result of the Russian invasion of Ukraine.
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.
Our customers may also choose to use cloud-based applications or platforms that are not life sciences specific—such as Salesforce, Inc., 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, which include, at times, some of our partners.
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.
If our customers fail to renew their subscription orders, renew their subscription orders with less favorable terms or at lower fee levels, fail to purchase new solutions, applications, or professional services from us, or terminate their existing agreements early, our revenues may decline or our future revenues may be constrained.
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, and 2020, our total revenues grew by 26%, 33%, and 28%, respectively, as compared to total revenues from the prior fiscal years.
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 rates will decline. In our fiscal years ended January 31, 2023, 2022, and 2021, our total revenues grew by 16%, 26%, and 33%, respectively, as compared to total revenues from the prior fiscal years.
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.
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.
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.
Through the expiration of the wind-down period, our agreement with Salesforce, Inc. 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.
In our fiscal years ended January 31, 2022, 2021, and 2020, our top 10 customers accounted for 31%, 36%, and 36% of our total revenues, respectively.
In our fiscal years ended January 31, 2023, 2022, and 2021, our top 10 customers accounted for 29%, 31%, and 36% of our total revenues, respectively.
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.
We have experienced delays and difficulties in our negotiations with such third-party data providers in the past, and we expect to continue experiencing difficulties in the future.
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 January 31, 2022, we have filed numerous domestic and foreign patent applications and have been issued 45 U.S. patents and 11 international patents.
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 January 31, 2023, we have filed numerous domestic and foreign patent applications and have been issued 59 U.S. patents and 13 international patents.
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.
We also utilize other computing infrastructure service providers to a lesser extent. 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.
In our fiscal years ended January 31, 2022, 2021, and 2020, our subscription services revenues grew by 26%, 32%, and 29%, respectively, as compared to subscription services revenues from the prior fiscal years.
In our fiscal years ended January 31, 2023, 2022, and 2021, our subscription services revenues grew by 17%, 26%, and 32%, respectively, as compared to subscription services revenues from the prior fiscal years.
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, Chinese Yuan, and Canadian Dollar, and may be adversely affected in the future due to changes in foreign currency exchange rates.
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, Japanese Yen, Canadian Dollar, British Pound Sterling, Hungarian Forint, Chinese Yuan, Israeli Shekel, and Brazilian Real, and may be adversely affected in the future due to changes in foreign currency exchange rates.
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.
Veeva Systems Inc. | Form 10-K 19 Table of Contents In addition to government regulations, privacy advocates and other key industry players have established and 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.
Such reductions could negatively impact sales of our solutions, including Veeva CRM and certain of our other Commercial Solutions. We cannot be certain such reductions will happen or of the magnitude of such reductions.
Such reductions could negatively impact sales of our solutions, including Veeva CRM and certain of our other Commercial Solutions, but we cannot be certain of the timing or magnitude of such reductions.
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.
Any of the above 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.
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, 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.
We may find it challenging to maintain the same level of employee productivity, foster collaboration, and maintain the beneficial aspects of 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.
The principal such competitor for our Commercial Solutions is IQVIA Holdings Inc., which offers a CRM application built on the Salesforce1 Platform, various data products, and other applications.
The principal such competitor for our Commercial Solutions is IQVIA Holdings Inc., which offers a CRM application built on the Salesforce platform, various data products, and other applications that compete with our products.
Understanding and implementing 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 applicable requirements.
Understanding and implementing 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 are unable to comply.
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 offering and investment in our product development teams; 28 Veeva Systems Inc. | Form 10-K Table of Contents • 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 I, Item 3.
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 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 3.
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.
We are required to take steps to legitimize any personal data transfers impacted by these developments, and to engage in contract negotiations with third parties that aid in processing personal data on our behalf. We may be subject to increased costs of compliance and limitations on our service providers and us. In the United States, the U.S.
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 Veeva Systems Inc. | Form 10-K 31 Table of Contents liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded.
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.
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.
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 macroeconomic and regulatory environments, the availability of funding in the life sciences industry, the announcement or planned introduction of new solutions by us or our competitors, and the purchasing approval processes of potential customers.
Deferred revenue and change in deferred revenue may not be accurate indicators of our future financial results. 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.
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.
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.
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 16 Veeva Systems Inc. | Form 10-K Table of Contents subject to many risks and uncertainties.
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.
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 22 Veeva Systems Inc. | Form 10-K Table of Contents imposes unanticipated conditions or restrictions on our ability to market our solutions.
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; • 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 as a result of the Russian invasion of Ukraine and continuing uncertainty surrounding the effects of COVID-19; • 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; 34 Veeva Systems Inc. | Form 10-K Table of Contents • 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 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; • 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; • future monetary policy changes in the United States and globally; • the operating performance and market value of other comparable companies; 30 Veeva Systems Inc. | Form 10-K Table of Contents • 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 a significant number of vested options, and previously disclosed his intention to donate up to 861,000 shares of common stock to a charitable fund that is likely to sell the donated shares prior to December 31, 2023), 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.
Our total revenues and subscription services revenue growth rates have declined in the past, and we Veeva Systems Inc. | Form 10-K 27 Table of Contents 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 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 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 Veeva Systems Inc. | Form 10-K 35 Table of Contents company or changes in our management that the stockholders of our company may deem advantageous.
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.
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).
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 regarding their employees, healthcare professionals, and patients. Patient data may include sensitive health data.
A significant percentage of our Commercial 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.
A significant percentage of our Commercial Solutions subscription Veeva Systems Inc. | Form 10-K 15 Table of Contents 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.
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.
Accordingly, we do not believe that changes on a quarterly basis in deferred revenue, unbilled accounts receivable, or normalized billings are accurate indicators of the underlying momentum of our business or future revenues.
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.
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.
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. If these third-party data limitations persist, our business may be negatively impacted.
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.
Our Veeva Commercial Cloud and Veeva R&D applications also compete to replace client server-based legacy solutions offered by companies such as Oracle, Microsoft Corporation, and other smaller application 14 Veeva Systems Inc. | Form 10-K Table of Contents providers.
Our Veeva Commercial Cloud and Veeva R&D applications also compete to replace client server-based legacy solutions offered by companies such as Oracle, Microsoft Corporation, and other smaller application providers.
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.
Veeva Systems Inc. | Form 10-K 31 Table of Contents 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.
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.
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.
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.
Veeva Systems Inc. | Form 10-K 11 Table of Contents 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.
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.
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 14 Veeva Systems Inc. | Form 10-K Table of Contents otherwise offer growth opportunities.
Interruptions in our services might reduce our revenues, cause us to issue refunds to Veeva Systems Inc. | Form 10-K 25 Table of Contents customers for prepaid and unused subscriptions, subject us to service level credit claims and potential liability, or adversely affect our renewal rates.
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.
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. The majority of our subscription agreements with our customers are for a term of one year.
Fluctuations in our results, changes in our guidance, 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.
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.
Salesforce, Inc. also has the right to terminate the agreement early in certain circumstances, including in the event of a material breach of the agreement by us, or if Salesforce, Inc. is subjected Veeva Systems Inc. | Form 10-K 21 Table of Contents 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.
“Legal Proceedings” and note 15 of the notes to our 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.
“Legal Proceedings ” and note 14 of the notes to our consolidated financial statements, and which we expect to continue to result in significant expense for the foreseeable future; 24 Veeva Systems Inc. | Form 10-K Table of Contents • international expansion; • acquisitions and investments; and • general operations, IT systems, facilities, and administration, including legal and accounting expenses.
Veeva Systems Inc. | Form 10-K 17 Table of Contents 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 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.
As of January 31, 2022, our founder and Chief Executive Officer, Peter Gassner, holds approximately 45.8% of the voting power of our outstanding capital stock and holders of our Class B common stock hold approximately 51.4% of the voting power of our outstanding capital stock in the aggregate.
As of January 31, 2023, our founder and Chief Executive Officer, Peter Gassner, holds approximately 44.9% of the voting power of our outstanding capital stock and holders of our Class B common stock hold approximately 50.3% of the voting power of our outstanding capital stock in the aggregate.
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.
Our existing agreement with Salesforce, Inc. 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.
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.
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.
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.
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.
There is also a trend toward countries enacting data localization or other country specific requirements which could be problematic to cloud software providers.
There is also a trend toward countries enacting data localization obligations, cross-border data transfer restrictions, and other country specific privacy and security requirements which could be problematic to cloud software providers.
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.
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.

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Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Biggest changeWe also lease offices in various locations, including North America, Europe, Asia Pacific, and Latin America. We expect to expand our facilities capacity in certain field locations during our fiscal year ending January 31, 2023 and may further expand our facilities capacity after January 31, 2023 as our employee base grows.
Biggest changeWe also lease offices in various locations, including North America, Europe, Asia Pacific, and Latin America. We expect to expand our facilities capacity in certain field locations during our fiscal year ending January 31, 2024 and may further expand our facilities capacity after January 31, 2024 as our employee base grows.
We believe that we will be able to obtain additional space on commercially reasonable terms. See note 11 of the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information about our lease commitments.
We believe that we will be able to obtain additional space on commercially reasonable terms. See note 10 of the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information about our lease commitments.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

5 edited+1 added−0 removed3 unchanged
Biggest change(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.
Biggest change(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 requests to the court for rulings on contested questions.
In addition to the legal proceedings referenced in note 15 , 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.
In addition to the legal proceedings referenced in note 14 , 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.
ITEM 3. 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 15 of the notes to our consolidated financial statements, which is incorporated herein by reference.
ITEM 3. 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 14 of the notes to our consolidated financial statements, which is incorporated herein by reference.
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 not yet final.
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.
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.
On October 31, 2019, as to Veeva's claims against IQVIA, the trial court's earlier dismissal was reversed by the court of appeal and the case was reassigned to a new trial court judge. On February 26, 2020, IQVIA answered our complaint.
Added
Discovery and requests to the court for rulings on contested questions are proceeding with respect to Veeva’s claims against Medidata and IQVIA and no trial date has been set. On February 13, 2023, Veeva and Sparta entered into a confidential settlement agreement and agreed to dismiss their claims against each other.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe stock price performance on the following graph is not necessarily indicative of future stock price performance. January 31, 2017 2018 2019 2020 2021 2022 Veeva Systems Inc. 100.00 148.50 257.64 346.35 653.06 558.80 S&P 500 100.00 126.41 123.48 150.26 176.18 217.21 S&P 1500 Application Software Index 100.00 148.30 178.97 241.85 318.66 352.87 ITEM 6. [RESERVED].
Biggest changeThe stock price performance on the following graph is not necessarily indicative of future stock price performance. 34 Veeva Systems Inc. | Form 10-K Table of Contents January 31, 2018 2019 2020 2021 2022 2023 Veeva Systems Inc. 100.00 173.50 233.23 439.77 376.30 271.32 S&P 500 100.00 97.69 118.87 139.37 171.83 157.71 S&P 1500 Application Software Index 100.00 120.67 161.22 212.71 235.90 191.10 ITEM 6. [RESERVED].
Market Price of Class A Common Stock Our Class A common stock is listed on the New York Stock Exchange under the symbol “VEEV.” Stockholders Veeva Systems Inc. | Form 10-K 37 Table of Contents As of January 31, 2022, we had 11 holders of record of our Class A common stock and 33 holders of record of our Class B common stock.
Market Price of Class A Common Stock Our Class A common stock is listed on the New York Stock Exchange under the symbol “VEEV.” Veeva Systems Inc. | Form 10-K 33 Table of Contents Stockholders As of January 31, 2023, we had 11 holders of record of our Class A common stock and 31 holders of record of our Class B common stock.
The chart assumes $100 was invested at the close of market on January 31, 2017 in the Class A common stock of Veeva Systems Inc., the S&P 500 Index, and the S&P 1500 Application Software 38 Veeva Systems Inc. | Form 10-K Table of Contents Index and assumes the reinvestment of any dividends.
The chart assumes $100 was invested at the close of market on January 31, 2018 in the Class A common stock of Veeva Systems Inc., the S&P 500 Index, and the S&P 1500 Application Software Index and assumes the reinvestment of any dividends.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeDeferred Revenue, Performance Obligations, and Unbilled Accounts Receivable 76 Note 11. Leases 76 Note 12. Stockholders’ Equity 77 Note 13. Other Income 81 Note 14. Net Income per Share 81 Table of Contents Note 15. Commitments and Contingencies 82 Note 16. Revenues by Product 84 Note 17. Information about Geographic Areas 85 Note 18. 401(k) Plan 85 Item 9.
Biggest changeDeferred Revenue, Performance Obligations, and Unbilled Accounts Receivable 69 Note 1 0 . Leases 69 Note 1 1 . Stockholders’ Equity 70 Note 1 2 . Other Income 74 Note 1 3 . Net Income per Share 74 Note 1 4 . Commitments and Contingencies 75 Note 1 5 . Revenues by Product 78 Note 1 6 .
Quantitative and Qualitative Disclosures About Market Risk 54 Item 8. Consolidated Financial Statements and Supplementary Data 55 Report of Independent Registered Public Accounting Firm 56 Consolidated Balance Sheets 58 Consolidated Statements of Comprehensive Income 59 Consolidated Statements of Stockholders’ Equity 59 Consolidated Statements of Cash Flows 61 Notes to Consolidated Financial Statements 62 Note 1.
Quantitative and Qualitative Disclosures About Market Risk 49 Item 8. Consolidated Financial Statements and Supplementary Data 50 Report of Independent Registered Public Accounting Firm 51 Consolidated Balance Sheets 53 Consolidated Statements of Comprehensive Income 54 Consolidated Statements of Stockholders’ Equity 55 Consolidated Statements of Cash Flows 56 Notes to Consolidated Financial Statements 57 Note 1.
Summary of Business and Significant Accounting Policies 62 Note 2. Acquisitions 67 Note 3. Short-Term Investments 69 Note 4. Deferred Costs 70 Note 5. Property and Equipment, Net 70 Note 6. Goodwill and Intangible Assets 71 Note 7. Accrued Expenses 72 Note 8. Fair Value Measurements 72 Note 9. Income Taxes 74 Note 10.
Summary of Business and Significant Accounting Policies 57 Note 2 . Short-Term Investments 62 Note 3 . Deferred Costs 63 Note 4 . Property and Equipment, Net 64 Note 5 . Goodwill and Intangible Assets 64 Note 6 . Accrued Expenses 65 Note 7 . Fair Value Measurements 65 Note 8 . Income Taxes 67 Note 9 .
Management’s Discussion and Analysis of Financial Condition and Results of Operations 39 Overview 40 Recent Development 41 Impact of the COVID-19 Pandemic 41 Key Factors Affecting Our Performance 42 Components of Results of Operations 42 Results of Operations 46 Operating Expenses and Operating Margin 48 Non-GAAP Financial Measures 50 Liquidity and Capital Resources 51 Critical Accounting Policies and Estimates 53 Item 7A.
Item 6. [Reserved] 35 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Overview 36 Recent Development 36 Components of Results of Operations 37 Results of Operations 40 Operating Expenses and Operating Margin 42 Non-GAAP Financial Measures 44 Liquidity and Capital Resources 46 Critical Accounting Policies and Estimates 48 Item 7A.
Removed
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 85 Item 9A. Controls and Procedures 86 Item 9B. Other Information 86
Added
Information about Geographic Areas 78 Table of Contents Note 1 7 . 401(k) Plan 78

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe 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. 50 Veeva Systems Inc. | Form 10-K 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: Fiscal year ended January 31, 2022 2021 (in thousands) Operating income on a GAAP basis $ 505,496 $ 377,794 Stock-based compensation expense 234,636 185,001 Amortization of purchased intangibles 18,520 20,007 Operating income on a non-GAAP basis $ 758,652 $ 582,802 Net income on a GAAP basis $ 427,390 $ 379,998 Stock-based compensation expense 234,636 185,001 Amortization of purchased intangibles 18,520 20,007 Income tax effect on non-GAAP adjustments (1) (75,827) (111,795) Net income on a non-GAAP basis $ 604,719 $ 473,211 Diluted net income per share on a GAAP basis $ 2.63 $ 2.36 Stock-based compensation expense 1.45 1.15 Amortization of purchased intangibles 0.11 0.12 Income tax effect on non-GAAP adjustments (1) (0.46) (0.69) Diluted net income per share on a non-GAAP basis $ 3.73 $ 2.94 (1) For the fiscal years ended January 31, 2022 and 2021, we used an estimated annual effective non-GAAP tax rate of 21% Liquidity and Capital Resources Fiscal year ended January 31, 2022 2021 2020 (in thousands) Net cash provided by operating activities $ 764,463 $ 551,246 $ 437,375 Net cash used in investing activities (346,152) (333,634) (516,910) Net cash (used in) provided by financing activities (4,140) 33,818 10,010 Effect of exchange rate changes on cash and cash equivalents (4,657) 484 (2,856) Net change in cash and cash equivalents $ 409,514 $ 251,914 $ (72,381) Our principal sources of liquidity continue to be comprised of our existing cash, cash equivalents, and short-term investments, as well as cash flows generated from our operations.
Biggest changeVeeva Systems Inc. | Form 10-K 45 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: Fiscal year ended January 31, 2023 2022 (in thousands) Net cash provided by operating activities on a GAAP basis $ 780,470 $ 764,463 Excess tax benefits from employee stock plans $ (82,009) $ (56,172) Net cash provided by operating activities on a non-GAAP basis $ 698,461 $ 708,291 Net cash used in investing activities on a GAAP basis $ (1,007,683) $ (346,152) Net cash used in financing activities on a GAAP basis $ (19,376) $ (4,140) Operating income on a GAAP basis $ 459,091 $ 505,496 Stock-based compensation expense 351,907 234,636 Amortization of purchased intangibles 19,464 18,520 Operating income on a non-GAAP basis $ 830,462 $ 758,652 Net income on a GAAP basis $ 487,706 $ 427,390 Stock-based compensation expense 351,907 234,636 Amortization of purchased intangibles 19,464 18,520 Income tax effect on non-GAAP adjustments (1) (163,508) (75,827) Net income on a non-GAAP basis $ 695,569 $ 604,719 Diluted net income per share on a GAAP basis $ 3.00 $ 2.63 Stock-based compensation expense 2.17 1.45 Amortization of purchased intangibles 0.12 0.11 Income tax effect on non-GAAP adjustments (1) (1.01) (0.46) Diluted net income per share on a non-GAAP basis $ 4.28 $ 3.73 (1) For the fiscal years ended January 31, 2023 and 2022, we used an estimated annual effective non-GAAP tax rate of 21% Liquidity and Capital Resources Fiscal year ended January 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 780,470 $ 764,463 $ 551,246 Net cash used in investing activities (1,007,683) (346,152) (333,634) Net cash (used in) provided by financing activities (19,376) (4,140) 33,818 Effect of exchange rate changes on cash and cash equivalents (4,986) (4,657) 484 Net change in cash and cash equivalents $ (251,575) $ 409,514 $ 251,914 Our principal sources of liquidity continue to be comprised of our existing cash, cash equivalents, and short-term investments, as well as cash flows generated from our operations.
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.
In addition, general and administrative expenses include fees related to third-party legal counsel, fees related to third-party accounting, tax and audit services, other corporate expenses, and allocated overhead. Other Income, Net Other income, net, consists primarily of interest income, transaction gains or losses on foreign currency, net of hedging costs, and amortization of premiums paid on investments.
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.
Foreign Currency 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 future capital requirements will depend on many factors including our revenue 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.
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.
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 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 business consulting services also contributed to the growth for the period.
We discuss factors that we Veeva Systems Inc. | Form 10-K 39 Table of Contents believe could cause or contribute to these differences below and elsewhere in this report, including those set forth under “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” Overview Veeva is the leading provider of industry cloud solutions for the global life sciences industry.
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.” Veeva Systems Inc. | Form 10-K 35 Table of Contents Overview Veeva is the leading provider of industry cloud solutions for the global life sciences industry.
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 52 Veeva Systems Inc. | Form 10-K Table of Contents sell shares of our Class A common stock or pay the withholding taxes in cash to cover taxes due upon vesting of such awards.
In June 2021, we began funding withholding taxes due on Veeva Systems Inc. | Form 10-K 47 Table of Contents 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.
Sales commissions are costs of obtaining customer contracts, which 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.
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.
For a discussion of our cash flows for the year ended January 31, 2021 compared to the year ended January 31, 2020, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 31, 2021, which is hereby incorporated by reference.
For a discussion of our cash flows for the year ended January 31, 2022 compared to the year ended January 31, 2021, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 31, 2022, which is hereby incorporated by reference.
The contribution of subscription services revenues and total revenues associated with our 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 R&D Solutions to industries outside the life sciences industry primarily in North America and Europe.
Revenues associated with our R&D Solutions are expected to continue to increase as a percentage of both subscription services revenues and total revenues in the future. We also offer certain of our R&D Solutions to industries outside the life sciences industry primarily in North America and Europe.
Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recorded. Veeva Systems Inc. | Form 10-K 53 Table of Contents
Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recorded. 48 Veeva Systems Inc. | Form 10-K Table of Contents
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.
Conversely, affiliated legal entities that maintain distinct master subscription agreements may choose to consolidate their orders under a single master subscription agreement, and, in that circumstance, our customer count would decrease.
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 .
Cost of professional services and other consists primarily of employee-related expenses associated with providing professional and business consulting services. The cost of providing professional services is significantly higher as a percentage of the related revenues than for our subscription services due to the direct labor costs and costs of third-party subcontractors. Operating Expenses Research and Development .
As of January 31, 2022, we have not recorded any taxes, such as withholding taxes, associated with the foreign earnings that are indefinitely reinvested outside of the United States.
As of January 31, 2023, we have not recorded any taxes, such as withholding taxes, associated with the foreign earnings that are indefinitely reinvested outside of the United States.
Our results of operations are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, Japanese Yen, Canadian Dollar, British Pound Sterling, Hungarian Forint, and Chinese Yuan. We may continue to experience favorable or adverse foreign currency impacts due to volatility in these currencies.
Our results of operations are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro, Japanese Yen, Canadian Dollar, British Pound Sterling, Hungarian Forint, Chinese Yuan, Israeli Shekel, and Brazilian Real. We may continue to experience favorable or adverse foreign currency impacts due to volatility in these currencies.
For the fiscal year ended January 31, 2022, subscription services revenues constituted 80% of total revenues and professional services and other revenues constituted 20% of total revenues.
For the fiscal year ended January 31, 2023, subscription services revenues constituted 80% of total revenues and professional services and other revenues constituted 20% of total revenues.
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.
Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use, 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.
The following is a discussion of our cash flows for the year ended January 31, 2022 compared to the year ended January 31, 2021.
The following is a discussion of our cash flows for the year ended January 31, 2023 compared to the year ended January 31, 2022.
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.
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 change to deferred revenue compared to if the adjustment had not occurred.
Professional services and other revenues for the fiscal year ended January 31, 2022 increased $81 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.
Professional services and other revenues for the fiscal year ended January 31, 2023 increased $55 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.
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 9 of the notes to our consolidated financial statements.
Provision for Income Taxes Provision for income taxes consists of federal and state, and local income taxes in the United States and income taxes in certain foreign jurisdictions. See note 8 of the notes to our consolidated financial statements.
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.
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.
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.
Subscription services revenues are recognized ratably over the respective non-cancellable subscription term because of the continuous transfer of control to the customer. Historically, our master subscription agreements have generally been non-cancellable during the term, although customers typically have had the right to terminate their agreements for cause in the event of material breach.
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.
When the amounts we are entitled to invoice in any period pursuant to multi-year orders with escalating fees are less than the revenue recognized, we will accrue an unbilled accounts receivable balance (a contract asset) related to such orders.
We refer to these costs as “allocated overhead.” Veeva Systems Inc. | Form 10-K 43 Table of Contents 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.
We refer to these costs as “allocated overhead.” Cost of Revenues Cost of subscription services revenues for all of our solutions consists of expenses related to our computing infrastructure provided by third parties, including Salesforce, Inc. and Amazon Web Services, personnel related costs associated with hosting our subscription services and providing support, including our data stewards, data acquisition and third-party contractor costs related to the development of our data products, expenses associated with computer equipment and software, and allocated overhead.
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 offering.
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 data solutions.
If a customer adds end users or additional Commercial 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 order, and as a 42 Veeva Systems Inc. | Form 10-K Table of Contents result, orders for additional end users or additional Commercial Solutions will commonly have an initial term of less than one year.
If a customer adds end users or additional Commercial 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 order, and as a result, orders for additional end users or additional Commercial Solutions will commonly have an initial term of less than one year.
The geographic mix of subscription services revenues was 57% from North America, 27% from Europe, and 16% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2022, as compared to subscription services revenues of 56% from North America, 27% from Europe, and 17% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2021.
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 fiscal year ended January 31, 2023, as compared to subscription services revenues of 57% from North America, 27% from Europe, and 16% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2022.
The increase in employee compensation-related costs is primarily driven by the increase in headcount during the period, as well as the 5% increase in salaries discussed above. The expansion of our headcount in research and development is to support development work for the products that we offer or may offer in the future.
The increase in employee compensation-related costs was primarily driven by the increase in headcount during the period, as well as compensation increases. The expansion of our headcount in research and development was to support development work for the products that we offer or may offer in the future.
The geographic mix of professional services and other revenues was 61% from North America, 30% from Europe, and 9% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2022 as compared to 62% from North America, 30% from Europe, and 8% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2021.
The geographic mix of professional services and other revenues was 64% from North America, 29% from Europe, and 7% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2023 as compared to 61% from North America, 30% from Europe, and 9% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2022.
The increase in employee compensation-related costs is primarily driven by the increase in headcount during the period, as well as the 5% increase in salaries discussed above. Additionally, there was an increase of $5 million in professional services that primarily consisted of fees associated with on-going litigation.
The increase in employee compensation-related costs was primarily driven by the increase in headcount during the period, as well as compensation increases. Additionally, there was an increase of $11 million in professional services that primarily consisted of fees associated with on-going litigation.
For our fiscal years ended January 31, 2022, 2021, and 2020, our subscription services revenues were $1,484 million, $1,179 million, and $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.
For our fiscal years ended January 31, 2023, 2022, and 2021, our subscription services revenues were $1,733 million, $1,484 million, and $1,179 million, respectively, representing year-over-year growth in subscription services revenues of 17% in our fiscal year ended January 31, 2023, and 26% in our fiscal year ended January 31, 2022.
The increase in subscription services revenues consisted of $173 million of subscription services revenue attributable to R&D Solutions and $132 million of subscription services revenue attributable to Commercial Solutions.
The increase in subscription services revenues consisted of $179 million of subscription services revenue attributable to R&D Solutions and $70 million of subscription services revenue attributable to Commercial Solutions.
Our primary use of cash is payment of our operating costs, which consist primarily of employee-related expenses, such as compensation and benefits, as well as general operating expenses for marketing, facilities, and overhead costs.
Our 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.
We recognized such tax benefits in our provision for income taxes of $56 million and $81 million for the fiscal years ended January 31, 2022 and 2021, respectively.
We recognized excess tax benefits of $94 million and $56 million in our provision for income taxes for the fiscal years ended January 31, 2023 and 2022, respectively.
General and Administrative Fiscal year ended January 31, 2022 2021 % Change (dollars in thousands) General and administrative $ 171,507 $ 149,113 15% Percentage of total revenues 9 % 10 % General and administrative expenses for the fiscal year ended January 31, 2022 increased $22 million, primarily due to an increase of $13 million in employee compensation-related costs (which includes an increase of $5 million in stock-based compensation).
General and Administrative Fiscal year ended January 31, 2023 2022 % Change (dollars in thousands) General and administrative $ 217,595 $ 171,507 27% Percentage of total revenues 10 % 9 % General and administrative expenses for the fiscal year ended January 31, 2023 increased $46 million, primarily due to an increase of $31 million in employee compensation-related costs (which includes an increase of $13 million in stock-based compensation).
For our fiscal years ended January 31, 2022, 2021, and 2020, our total revenues were $1,851 million, $1,465 million, and $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.
For our fiscal years ended January 31, 2023, 2022, and 2021, our total revenues were $2,155 million, $1,851 million, and $1,465 million, respectively, representing year-over-year growth in total revenues of 16% in our fiscal year ended January 31, 2023, and 26% in our fiscal year ended January 31, 2022.
Sales and Marketing Fiscal year ended January 31, 2022 2021 % Change (dollars in thousands) Sales and marketing $ 288,061 $ 235,014 23% Percentage of total revenues 16 % 16 % Sales and marketing expenses for the fiscal year ended January 31, 2022 increased $53 million, due to an increase in employee compensation-related costs (which includes an increase of $16 million in stock-based compensation).
Sales and Marketing Fiscal year ended January 31, 2023 2022 % Change (dollars in thousands) Sales and marketing $ 348,691 $ 288,061 21% Percentage of total revenues 16 % 16 % Sales and marketing expenses for the fiscal year ended January 31, 2023 increased $61 million, due to an increase of $47 million in employee compensation-related costs (which includes an increase of $31 million in stock-based compensation).
Net cash used in financing activities was $4 million for the fiscal year ended January 31, 2022 compared to $34 million provided by financing activities for the fiscal year ended January 31, 2021.
Net cash used in financing activities was $19 million for the fiscal year ended January 31, 2023 compared to $4 million used in financing activities for the fiscal year ended January 31, 2022.
There were no changes to the aggregate amounts reported within our consolidated statements of comprehensive income. 40 Veeva Systems Inc. | Form 10-K Table of Contents 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.
Our PBC Charter 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.
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 and as a result of compensation increases in response to labor market conditions and inflationary pressure. Gross margin for the fiscal years ended January 31, 2022 and 2021 was 73% and 72%, respectively.
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. Gross margin for the fiscal years ended January 31, 2023 and 2022 was 72% and 73%, respectively.
For a discussion of our results of operations for the year ended January 31, 2021 compared to the year ended January 31, 2020, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 31, 2021, which is hereby incorporated by reference. 46 Veeva Systems Inc. | Form 10-K Table of Contents Revenues Fiscal year ended January 31, 2022 2021 % Change (dollars in thousands) Revenues: Subscription services $ 1,483,976 $ 1,179,486 26% Professional services and other 366,801 285,583 28% Total revenues $ 1,850,777 $ 1,465,069 26% Percentage of revenues: Subscription services 80 % 81 % Professional services and other 20 19 Total revenues 100 % 100 % Total revenues for the fiscal year ended January 31, 2022 increased $386 million, of which $304 million was from growth in subscription services revenues.
For a discussion of our results of operations for the year ended January 31, 2022 compared to the year ended January 31, 2021, please refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 31, 2022, which is hereby incorporated by reference. 40 Veeva Systems Inc. | Form 10-K Table of Contents Revenues Fiscal year ended January 31, 2023 2022 % Change (dollars in thousands) Revenues: Subscription services $ 1,733,002 $ 1,483,976 17% Professional services and other 422,058 366,801 15% Total revenues $ 2,155,060 $ 1,850,777 16% Percentage of revenues: Subscription services 80 % 80 % Professional services and other 20 20 Total revenues 100 % 100 % Total revenues for the fiscal year ended January 31, 2023 increased $304 million, of which $249 million was from growth in subscription services revenues.
Provision for Income Taxes Fiscal year ended January 31, 2022 2021 % Change (dollars in thousands) Income before income taxes $ 512,311 $ 393,993 30% Provision for income taxes $ 84,921 $ 13,995 507% Effective tax rate 16.6 % 3.6 % 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.
Provision for Income Taxes Fiscal year ended January 31, 2023 2022 % Change (dollars in thousands) Income before income taxes $ 509,096 $ 512,311 (1)% Provision for income taxes $ 21,390 $ 84,921 (75)% Effective tax rate 4.2 % 16.6 % 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.
As of January 31, 2022, 2021, and 2020, we had 653, 572 and 523 Commercial Solutions customers, respectively, and 860, 664, and 538 R&D Solutions customers, respectively. These customer count totals are net of customer attrition during each period.
As of January 31, 2023, 2022, and 2021, we served 1,388, 1,205, and 993, customers, respectively. As of January 31, 2023, 2022, and 2021, we had 684, 653 and 572 Commercial Solutions customers, respectively, and 1,025, 860, and 664 R&D Solutions customers, respectively. These customer count totals are net of customer attrition during each period.
As of January 31, 2022, our cash, cash equivalents, and short-term investments totaled $2.4 billion, of which $97 million represented cash and cash equivalents held outside of the United States.
As of January 31, 2023, our cash, cash equivalents, and short-term investments totaled $3.1 billion, of which $76 million represented cash and cash equivalents held outside of the United States.
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 data acquisition costs. Note that our net income reflects the impact of excess tax benefits related to equity compensation.
Our primary uses of cash from operating activities are for employee-related expenditures, expenses related to our computing infrastructure (including Salesforce, Inc. and Amazon Web Services), building infrastructure costs (including leases for office space), fees for third-party legal counsel and accounting services, and data acquisition costs.
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. • Stock-based compensation expenses.
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 44 Veeva Systems Inc. | Form 10-K Table of Contents accounting periods, and comparing our financial results to our peers, many of which provide similar non-GAAP financial measures. • Excess tax benefits.
In our fiscal year ended January 31, 2022, we derived approximately 59% and 41% of our subscription services revenues and 56% and 44% of our total revenues from our Commercial Solutions and R&D Solutions, respectively.
For the fiscal year ended January 31, 2022, we derived approximately 59% and 41% of our subscription services revenues and 56% and 44% of our total revenues from our Commercial Solutions and R&D Solutions, respectively. Subscription services revenues are expected to continue to increase as a percentage of total revenues in the future.
The $38 million decrease is primarily related to $55 million of cash used to pay employee taxes related to the net share settlement of RSUs, partially offset by an increase of $52 million in proceeds from employee stock option exercises due to increased stock option activity during the period.
The $15 million increase is primarily related to an increase of $8 million used to pay employee taxes related to the net share settlement of RSUs and a decrease of $8 million in proceeds from employee stock option exercises due to decreased stock option activity during the period.
Veeva Systems Inc. | Form 10-K 51 Table of Contents 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.
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.
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.
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 are not considered indefinitely reinvested outside the United States, except in certain designated jurisdictions.
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 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 solutions are grouped into two major product categories —Veeva Development Cloud and Veeva Commercial Cloud.
New Accounting Pronouncements Adopted in Fiscal 2022 Refer to note 1 of the notes to our consolidated financial statements for a full description of the recent accounting pronouncements adopted during the fiscal year ended January 31, 2022. 44 Veeva Systems Inc. | Form 10-K Table of Contents 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 resulting from such changes provided certain criteria are met.
Recent Accounting Pronouncements Reference Rate Reform In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 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.
For the fiscal year ended January 31, 2021, we derived approximately 63% and 37% of our subscription services revenues and 61% and 39% of our total revenues from our Commercial Solutions and R&D Solutions, respectively.
In our fiscal year ended January 31, 2023, we derived approximately 55% and 45% of our subscription services revenues and 52% and 48% of our total revenues from our Commercial Solutions and R&D Solutions, respectively.
We expect general and administrative expenses to continue to grow in absolute dollars in the future, primarily due to higher headcount, compensation increases for the reasons discussed above, investments in information technology infrastructure, and third-party fees, including fees associated with on-going litigation.
We expect general and administrative expenses to continue to increase in the fiscal year ending January 31, 2024, primarily due to higher headcount, investments in information technology infrastructure, and third-party fees, including fees associated with on-going litigation.
During the fiscal year ended January 31, 2022 as compared to the prior year period, our effective tax rate increased primarily due to a reduction in excess tax benefits related to equity compensation and an increase in valuation allowance within certain jurisdictions.
For the fiscal years ended January 31, 2023 and 2022, our effective tax rates were 4.2% and 16.6%, respectively. During the fiscal year ended January 31, 2023 as compared to the prior year period, our effective tax rate decreased primarily due to an increase in excess tax benefits as well as a reduced impact from valuation allowance within certain jurisdictions.
Such reductions could negatively impact sales of our solutions, including Veeva CRM and certain of our other Commercial Solutions, but 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.
Such reductions could negatively impact sales of our solutions, including Veeva CRM and certain of our other Commercial Solutions, but we cannot be certain such reductions will happen or of the timing or magnitude of such reductions.
Veeva Systems Inc. | Form 10-K 45 Table of Contents Results of Operations The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues for each of the periods indicated: Fiscal year ended January 31, 2022 2021 (in thousands) Consolidated Statements of Comprehensive Income Data: Revenues: Subscription services $ 1,483,976 $ 1,179,486 Professional services and other 366,801 285,583 Total revenues 1,850,777 1,465,069 Cost of revenues (1) : Cost of subscription services 224,911 184,589 Cost of professional services and other 278,767 224,339 Total cost of revenues 503,678 408,928 Gross profit 1,347,099 1,056,141 Operating expenses (1) : Research and development 382,035 294,220 Sales and marketing 288,061 235,014 General and administrative 171,507 149,113 Total operating expenses 841,603 678,347 Operating income 505,496 377,794 Other income, net 6,815 16,199 Income before income taxes 512,311 393,993 Provision for income taxes 84,921 13,995 Net income $ 427,390 $ 379,998 (1) Includes stock-based compensation as follows: Cost of revenues: Cost of subscription services $ 4,795 $ 4,840 Cost of professional services and other 36,293 27,698 Research and development 83,837 63,541 Sales and marketing 56,830 40,574 General and administrative 52,881 48,348 Total stock-based compensation $ 234,636 $ 185,001 Fiscal Year Ended January 31, 2022 and 2021 The following is a discussion of our results of operations for the year ended January 31, 2022 compared to the year ended January 31, 2021.
Veeva Systems Inc. | Form 10-K 39 Table of Contents Results of Operations The following tables set forth selected consolidated statements of operations data and such data as a percentage of total revenues for each of the periods indicated: Fiscal year ended January 31, 2023 2022 (in thousands) Consolidated Statements of Comprehensive Income Data: Revenues: Subscription services $ 1,733,002 $ 1,483,976 Professional services and other 422,058 366,801 Total revenues 2,155,060 1,850,777 Cost of revenues (1) : Cost of subscription services 257,635 224,911 Cost of professional services and other 351,770 278,767 Total cost of revenues 609,405 503,678 Gross profit 1,545,655 1,347,099 Operating expenses (1) : Research and development 520,278 382,035 Sales and marketing 348,691 288,061 General and administrative 217,595 171,507 Total operating expenses 1,086,564 841,603 Operating income 459,091 505,496 Other income, net 50,005 6,815 Income before income taxes 509,096 512,311 Provision for income taxes 21,390 84,921 Net income $ 487,706 $ 427,390 (1) Includes stock-based compensation as follows: Cost of revenues: Cost of subscription services $ 6,257 $ 4,795 Cost of professional services and other 50,341 36,293 Research and development 141,571 83,837 Sales and marketing 87,509 56,830 General and administrative 66,229 52,881 Total stock-based compensation $ 351,907 $ 234,636 Fiscal Year Ended January 31, 2023 and 2022 The following is a discussion of our results of operations for the year ended January 31, 2023 compared to the year ended January 31, 2022.
Costs and Expenses Fiscal year ended January 31, 2022 2021 % Change (dollars in thousands) Cost of revenues: Cost of subscription services $ 224,911 $ 184,589 22% Cost of professional services and other 278,767 224,339 24% Total cost of revenues $ 503,678 $ 408,928 23% Gross margin percentage: Subscription services 85 % 84 % Professional services and other 24 % 21 % Total gross margin percentage 73 % 72 % Gross profit $ 1,347,099 $ 1,056,141 28% Cost of revenues for the fiscal year ended January 31, 2022 increased $95 million, of which $40 million was related to cost of subscription services.
Cost of Revenue and Gross Margin Fiscal year ended January 31, 2023 2022 % Change (dollars in thousands) Cost of revenues: Cost of subscription services $ 257,635 $ 224,911 15% Cost of professional services and other 351,770 278,767 26% Total cost of revenues $ 609,405 $ 503,678 21% Gross margin percentage: Subscription services 85 % 85 % Professional services and other 17 % 24 % Total gross margin percentage 72 % 73 % Gross profit $ 1,545,655 $ 1,347,099 15% Cost of revenues for the fiscal year ended January 31, 2023 increased $106 million, of which $33 million was related to cost of subscription services.
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 to commercialization.
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 to commercialization.
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.
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. We do not expect the adoption of ASU 2021-08 to have a material impact on our consolidated financial statements.
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.
As we continue to invest in our growth through hiring, we expect operating expenses and stock-based compensation to increase in the fiscal year ending January 31, 2024.
Net cash used in investing activities was $346 million for the fiscal year ended January 31, 2022 compared to $334 million used in investing activities for the fiscal year ended January 31, 2021.
We also use cash to invest in capital assets to support our growth. Net cash used in investing activities was $1,008 million for the fiscal year ended January 31, 2023 compared to $346 million used in investing activities for the fiscal year ended January 31, 2022.
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. 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%.
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%.
The increase in cost of subscription services was primarily due to an increase of $14 million in other computing infrastructure costs, the vast majority of which was for computing infrastructure provided by Amazon Web Services, and an increase of $7 million in data acquisition costs related to the Veeva Data Cloud product offering.
The increase in cost of subscription services was primarily due to an increase of $10 million in other computing infrastructure costs, the vast majority of which was for computing infrastructure provided by Amazon Web Services, an increase of $9 million in employee compensation-related costs (which includes an increase of $1 million in stock-based compensation), an increase of $6 million in data acquisition costs related to our data solutions, and an increase of $4 million in costs of third-party contractors related to the development of our data products.
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 earlier in the term of such multi-year 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. Since February 1, 2023, our master subscription agreements that govern multi-year orders generally include a termination for convenience right for our customers.
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.
Under currently enacted tax laws, if we were to choose to repatriate the funds we have designated as indefinitely reinvested outside the United States, such amounts may be subject to certain jurisdictional taxes (e.g., withholding taxes). 46 Veeva Systems Inc. | Form 10-K Table of Contents We have financed our operations primarily through cash generated from operations.
Research and development expenses consist primarily of employee-related expenses, third-party consulting fees, hosted infrastructure costs, and allocated overhead. We continue to focus our research and development efforts on adding new features and applications and increasing the functionality and enhancing the ease of use of our cloud-based applications. Sales and Marketing .
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. 38 Veeva Systems Inc. | Form 10-K Table of Contents Sales and Marketing .
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.
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.
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.
We define the term normalized 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, adjusted for the impact of changes in the timing of customer renewals (such as changing the renewal date of multiple products to be coterminous) or changes in billing frequency (such as changing from annual to quarterly billings) during the period.
Cost of professional services and other for the fiscal year ended January 31, 2022 increased $54 million, primarily due to an increase of $50 million in employee compensation-related costs (which includes an increase of $9 million in stock-based compensation and the impact of a 5% increase in salaries that we implemented for the majority of our employees on September 1, 2021 in response to unusual inflationary pressure and the demand environment for skilled employees).
Cost of professional services and other for the fiscal year ended January 31, 2023 increased $73 million, primarily due to an increase of $62 million in employee compensation-related costs (which includes an increase of $14 million in stock-based compensation). Employee compensation-related costs increased in response to worldwide labor market conditions and inflationary pressure as discussed previously.
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.
Accordingly, we do not believe that changes on a Veeva Systems Inc. | Form 10-K 37 Table of Contents quarterly basis in deferred revenue, unbilled accounts receivable, or normalized billings are accurate indicators of future revenues for any given period of time.
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 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 these ASUs to have a material impact on our consolidated financial statements.
We currently expect most of these reductions to take place during our fiscal year ending January 31, 2023, with some reductions still occurring in our fiscal year ending January 31, 2024.
While the majority of these reductions were completed by the end of our fiscal year ended January 31, 2023, we expect additional reductions to take place through the end of our fiscal year ending January 31, 2024.
The increase in employee compensation-related costs is primarily driven by the increase in headcount during the period, as well as the 5% increase in salaries discussed above.
There was also an increase of $10 million in marketing program costs as in-person events resumed. The increase in employee compensation-related costs was primarily driven by the increase in headcount during the period, as well as compensation increases.
Additionally, we expect travel and entertainment costs to start to increase in the fiscal year ending January 31, 2023.
We expect sales and marketing expenses to increase in the fiscal year ending January 31, 2024, primarily due to employee-related expenses as we increase our headcount to support our sales and marketing efforts associated with our product offerings. Additionally, we expect travel and entertainment costs to continue to increase in the fiscal year ending January 31, 2024.
Net cash provided by operating activities was $764 million for the fiscal year ended January 31, 2022 compared to $551 million provided by operating activities for the fiscal year ended January 31, 2021. The $213 million increase in operating cash flow was primarily due to increased sales and the related cash collections.
The $16 million increase in operating cash flow was primarily due to increased sales and the related cash collections and an increase of $26 million in cash provided by operating activities due to the excess tax benefit from stock option exercises.
If the requirement is not modified, it will materially reduce our cash flows beginning in 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.
The requirement may also reduce our cash flows from operating activities in future periods, the amounts and specific periods of which we are unable to estimate at this time. 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.
Over time, we expect the proportion of our total revenues from professional services to decrease.
Over time, we expect the proportion of our total revenues from professional services to decrease. Since February 1, 2023, our master subscription agreements that govern multi-year orders generally include a termination for convenience right for our customers.
Other Income, Net Fiscal year ended January 31, 2022 2021 % Change (dollars in thousands) Other income, net $ 6,815 $ 16,199 (58)% Other income, net, for the fiscal year ended January 31, 2022 decreased $9 million, primarily due to a decrease in interest income, net, of $3 million, reflecting the lower interest rates on short-term investments, increases in amortization on investments of $3 million, and increases of foreign currency loss of $3 million.
Veeva Systems Inc. | Form 10-K 43 Table of Contents Other Income, Net Fiscal year ended January 31, 2023 2022 % Change (dollars in thousands) Other income, net $ 50,005 $ 6,815 634% Other income, net, for the fiscal year ended January 31, 2023 increased $43 million, primarily due to an increase in interest income of $32 million and a decrease in investment amortization of $10 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor the fiscal years ended January 31, 2022, 2021 and 2020, we had foreign currency losses of $1 million, gains of $2 million, and losses of $1 million, respectively.
Biggest changeRealized and unrealized foreign currency losses, primarily resulting from the re-measurement of monetary account balances offset by the foreign currency hedges, were both $4 million for the fiscal year ended January 31, 2023. For the fiscal year ended January 31, 2022, we had a realized foreign currency loss of $2 million and an unrealized foreign currency gain of $1 million.
We engage in the hedging of our foreign currency transactions as described in note 8 of the notes to our 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.
We engage in the hedging of our foreign currency transactions as described in note 7 of the notes to our 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.
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.
The cash and cash equivalents are held for working capital purposes and other operational activities. 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.
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, Hungarian Forint, and Chinese Yuan, and may be adversely affected in the future due to changes in foreign currency exchange rates.
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, Hungarian Forint, Chinese Yuan, Israeli Shekel, and Brazilian Real, and may be adversely affected in the future due to changes in foreign currency exchange rates.
Interest Rate Sensitivity We had cash, cash equivalents and short-term investments totaling $2.4 billion as of January 31, 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.
Interest rate sensitivity We had cash, cash equivalents and short-term investments totaling $3.1 billion as of January 31, 2023. 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.
An immediate increase of 100-basis points in interest rates would have resulted in a $13 million market value reduction in our investment portfolio as of January 31, 2022. An immediate decrease of 100-basis points in interest rates would have increased the market value by $12 million as of January 31, 2022.
An immediate increase of 100-basis points in interest rates would have resulted in a $24 million market value reduction in our investment portfolio as of January 31, 2023. An immediate decrease of 100-basis points in interest rates would have increased the market value by $24 million as of January 31, 2023.
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. 54 Veeva Systems Inc. | Form 10-K Table of Contents
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.
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. Changes in exchange rates may negatively affect our revenues and other operating results as expressed in U.S. dollars.
We have also experienced and will continue to experience foreign currency fluctuations due to the periodic re-measurement of monetary account balances that are denominated in currencies other than the functional currency of the entities in which they are recorded and such fluctuations can impact our net income.
Removed
We have experienced and will continue to experience fluctuations in our net income as a result of 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.
Added
For example, changes in exchange rates negatively affected our revenues as expressed in U.S. dollars for the fiscal year ended January 31, 2023.
Removed
This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur.
Added
Additionally, changes in exchange rates reduced our expenses as expressed in U.S. dollars for the fiscal year ended January 31, 2023, which largely offset the impact to operating income for those periods resulting from changes in exchange rates that reduced revenue as expressed in U.S. dollars.
Added
For the fiscal year ended January 31, 2023, about 83% of our revenues and about 80% of our expenses were denominated in USD, respectively.
Added
Veeva Systems Inc. | Form 10-K 49 Table of Contents

Other VEEV 10-K year-over-year comparisons