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What changed in VEEVA SYSTEMS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of VEEVA SYSTEMS INC's 2023 and 2024 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 2024 report.

+334 added−363 removedSource: 10-K (2024-03-25) vs 10-K (2023-03-30)

Top changes in VEEVA SYSTEMS INC's 2024 10-K

334 paragraphs added · 363 removed · 285 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn 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.
Biggest changeVault CRM is currently used by early adopters and planned for general availability in April 2024. • 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 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 Crossix provides pharmaceutical brands a best-in-class analytics platform to maximize media investments and drive greater marketing effectiveness.
Our solutions for clinical research sites enable regulatory documents and trial information to be managed in a modern cloud solution that is intended to accelerate the clinical research process for the life sciences industry overall. We also bring the benefits of our content and data management solutions to customers in the consumer products and chemical industries.
Our solutions for clinical research sites enable regulatory documents and trial information to be managed in a modern cloud solution that is intended to accelerate the clinical research process for the life sciences industry overall. We also bring the benefits of our content and data management solutions to customers in the consumer products industries.
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.
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) through commercialization.
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.
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, including Vault CRM, and certain other Veeva Commercial Cloud applications, we utilize Amazon Web Services.
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.
For financial reporting purposes, revenues associated with our Veeva Commercial Cloud, Veeva Data Cloud, and Veeva Claims solutions are classified as “Commercial Solutions” revenues, and revenues associated with our Veeva Development Cloud, Veeva RegulatoryOne, and Veeva QualityOne solutions are classified as “R&D Solutions” revenues.
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.
Technology Infrastructure and Operations Our products are hosted in data centers located in the United States, the United Kingdom, the European Union, Japan, South Korea, Australia, and Brazil. 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.
The platform is designed to enable seamless execution and flow of data between clinical trial stakeholders—including patients, research sites, contract research organizations (CROs), and trial sponsors—for faster, more efficient trials that achieve higher data accuracy and increased patient diversity .
Our clinical platform is designed to enable seamless execution and flow of data between clinical trial stakeholders—including patients, research sites, contract research organizations (CROs), and trial sponsors—for faster, more efficient trials that achieve higher data accuracy and increased patient diversity .
Information contained on our website is not incorporated by reference into this Form 10-K, and you should not consider information contained on our website to be part of this Form 10-K or in deciding whether to purchase shares of our Class A common stock.
Information contained on our website is not incorporated by reference into this Form 10-K, and you should not consider information contained on our website to be part of this Form 10-K or in deciding whether to purchase shares of our common stock.
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.
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 Development Cloud applications to companies outside the life sciences industry.
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.
Veeva Commercial Cloud includes solutions for the sales, marketing, and medical affairs functions of a life sciences company: • 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.
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.
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, 2024, 44% of our global employee population self-identified as female and approximately 42% of our U.S. workforce self-identified as members of underrepresented racial or ethnic groups.
No single vendor offers products that compete with all of our Veeva Vault applications, but IQVIA, Dassault Systèmes, OpenText Corporation, Oracle Corporation, Honeywell International Inc., and other smaller application providers offer applications that compete with certain of our Veeva Vault applications.
No single vendor offers products that compete with all of our Veeva Development Cloud applications, but IQVIA, Dassault Systèmes, OpenText Corporation, Oracle Corporation, Honeywell International Inc., and other smaller application providers offer applications that compete with certain of our Veeva Development Cloud applications.
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.
Our Industry Cloud Solutions for Life Sciences Our industry cloud solutions for the life sciences industry are grouped into three major product categories—Veeva Development Cloud, Veeva Commercial Cloud, and Veeva Data 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.
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.
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.
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.
The table below provides a summary of our issued patents and pending patent applications as of January 31, 2024: Issued U.S. patents (expiring between May 2027 and January 2039) 74 Issued international patents (expiring between April 2025 and June 2037) 13 U.S. and international pending patent applications 90 Our patents and patent applications cover technology within our Veeva Development Cloud, Veeva Commercial Cloud, and Veeva Data Cloud product families.
Competition The markets for our solutions are global, rapidly evolving, highly competitive, and subject to changing regulations, advancing technology, and shifting customer needs. In new sales cycles, we generally compete with other cloud-based solutions from providers that make applications geared toward the life sciences industry.
For more information about our privacy practices, please visit veeva.com/privacy. Competition The markets for our solutions are global, rapidly evolving, highly competitive, and subject to changing regulations, advancing technology, and shifting customer needs. In new sales cycles, we generally compete with other cloud-based solutions from providers that make applications geared toward the life sciences industry.
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.
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 professional services teams work with our systems integrator partners to deliver projects.
Our Cloud Solutions for the Consumer Products and Chemical (CP&C) Industries Our initial applications for customers outside of life sciences address specific content and data management processes within the CP&C industries. Veeva QualityOne is a robust quality management, document management, and training solution. Veeva RegulatoryOne helps companies manage regulatory submission content.
Our Cloud Solutions for the Consumer Products Industries Our initial applications for customers outside of life sciences address specific content and data management processes within the consumer products industries. Veeva QualityOne is a robust quality management, document management, and training solution. Veeva RegulatoryOne helps companies manage regulatory submission content. Veeva Claims addresses the end-to-end product and marketing claims management process.
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.
We also deliver solutions to companies in the consumer products industries. Our Human Capital Resources As of January 31, 2024, we had 7,172 employees worldwide, up by 428 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.
Policing unauthorized use of our technology and intellectual property rights is difficult, and protection of our rights through civil enforcement mechanisms may be expensive and time consuming.
Policing unauthorized use of our technology and intellectual property rights is difficult, and protection of our rights through civil enforcement mechanisms may be expensive and time consuming, and may result in the impairment or loss of portions of our intellectual property.
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.
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.
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.
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 Quality is the life science industry’s only unified suite of applications for managing quality content, processes, and training on a single cloud platform.
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.
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.
We have distinct R&D and commercial sales teams, which we further segment to focus on selling to large global life sciences companies and smaller life sciences companies. We also have a distinct sales team for our sales efforts to companies in the CP&C industries.
We have distinct R&D and commercial sales teams, which we further segment to focus on selling to large global life sciences companies and smaller life sciences companies. We also have product specific and industry specific sales teams for certain of our products.
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.
These offerings include applications that manage drug safety content as well as the intake, processing, and submission of adverse event data. • Veeva Vault RIM is a suite of applications that provides fully integrated regulatory information management capabilities on a single cloud platform.
FDA requirement for maintenance of electronic records EU Annex 11 EU Good Manufacturing Processes (GMP) requirement for maintenance of electronic records 21 CFR 203 Drug sample tracking as required by the Prescription Drug Marketing Act PFSB Notification, No. 0401022 (Japan) Use of Electromagnetic Records and Electronic Signatures for Approval of, or License for, Drugs OECD No. 17 Application of Good Laboratory Practice (GLP) Principles to Computerised Systems ICH E6(R2) Good Clinical Practice (GCP) Validation Principles Security Program Veeva maintains an information security management system certified to ISO 27001 and managed by our Veeva security team to ensure security controls conform to established standards across both product and infrastructure components.
FDA requirement for maintenance of electronic records EU Annex 11 EU Good Manufacturing Processes (GMP) requirement for maintenance of electronic records 21 CFR 203 Drug sample tracking as required by the Prescription Drug Marketing Act PFSB Notification, No. 0401022 (Japan) Use of Electromagnetic Records and Electronic Signatures for Approval of, or License for, Drugs OECD No. 17 Application of Good Laboratory Practice (GLP) Principles to Computerised Systems ICH E6(R2) Good Clinical Practice (GCP) Validation Principles Privacy Program Veeva maintains a data privacy program aligned to applicable laws such as the European Union’s General Data Protection Regulation (EU GDPR), the United Kingdom’s General Data Protection Regulation (UK GDPR), the California Consumer Privacy Act (CCPA), and the U.S.
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.
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. 6 Veeva Systems Inc. | Form 10-K Table of Contents Salesforce, Inc. has also announced their intention to offer a life sciences industry-specific CRM solution, which will likely compete with our offerings.
Veeva Claims addresses the end-to-end product and marketing claims management process. Veeva Business Consulting We offer Veeva Business Consulting services through dedicated teams that are distinct from our professional services and support organization. Veeva Business Consulting provides strategic consulting services and solutions that are often enabled by our unique industry-wide perspective and proprietary data.
Our systems integrator partners include Accenture, Cognizant, Tata Consultancy Services (TCS), and other life sciences specialty firms. Veeva Business Consulting We offer Veeva Business Consulting services through dedicated teams that are distinct from our professional services and support organization. Veeva Business Consulting provides strategic consulting services and solutions that are often enabled by our unique industry-wide perspective and proprietary data.
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.
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 Commercial Cloud is a product category comprised of software and analytics solutions built specifically for life sciences companies to more efficiently and effectively commercialize their products.
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.
Our Veeva Data Cloud products as well as Veeva Crossix compete with IQVIA, Ipsos Group S.A., Definitive Health Corp., and smaller data and data analytics providers.
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.
Commercial Business Consulting typically focuses on a particular customer success initiative, commercial strategy, or business process change like digital engagement, commercial content management, field optimization, and commercial insights and analytics.
Our infrastructure providers employ advanced measures to ensure physical integrity and security, including redundant power and cooling systems, fire and flood prevention mechanisms, continual security coverage, biometric readers at entry points and anonymous exteriors. We also implement various disaster recovery measures such that data loss would be minimized in the event of a single data center disaster.
Veeva Systems Inc. | Form 10-K 5 Table of Contents Our infrastructure providers employ advanced measures to ensure physical integrity and security, including redundant power and cooling systems, fire and flood prevention mechanisms, continual security coverage, biometric readers at entry points and anonymous exteriors.
For 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.
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., and Idorsia Pharmaceuticals Ltd.
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 technology is generally based on multitenant architectures that apply common, consistent management practices for all customers using our solutions. We enable multiple customers to share the same version of our solutions while securely partitioning their respective data. Veeva CRM and portions of our multichannel CRM applications currently utilize the Salesforce platform of Salesforce, Inc.
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.
Applications include solutions for aggregating and 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 Vault Safety is a suite of applications that unifies systems and processes to enable proactive patient safety.
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.
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 applications are built on a modern data platform that combines intelligent software automation with human curation to provide deep data across a growing number of areas, including key people, publications, conferences, and digital engagement. • Veeva Compass is a suite of de-identified U.S. longitudinal patient, projected prescriber, and national data designed for a wide range of commercial use cases, including business planning, patient finding, patient journey analytics, segmentation and targeting, forecasting, and incentive compensation.
We architect our solutions using redundant configurations to minimize service interruptions. We continually monitor our solutions for any sign of failure or pending failure, and we take preemptive action to attempt to minimize or prevent downtime. Our technology is based on multitenant architectures that apply common, consistent management practices for all customers using our solutions.
We also implement various disaster recovery measures such that data loss would be minimized in the event of a single data center disaster. We architect our solutions using redundant configurations to minimize service interruptions. We continually monitor our solutions for any sign of failure or pending failure, and we take preemptive action to attempt to minimize or prevent downtime.
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.
Our Veeva Vault applications, including Vault CRM, and portions of our other Commercial Cloud applications are built upon our own proprietary platforms. Certain of our other applications rely on technology platforms provided by third parties. For example, our commercial data warehouse application utilizes Amazon Redshift and our digital engagement application utilizes Zoom.
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.
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 do not require any of our employees anywhere in the world to enter into non-compete agreements.
We have a Chief Privacy Officer, who collaborates with our Chief Information Security Officer and business and product leaders throughout our organization. Veeva maintains an active EU-U.S. Privacy Shield certification and a Swiss-U.S. Privacy Shield certification; however, we currently rely on the EU Standard Contractual Clauses as our alternative legal data transfer mechanism.
Health Insurance Portability and Accountability Act (HIPAA). We have a Chief Privacy Officer who collaborates with our Chief Information Security Officer and business and product leaders throughout our organization.
Our data offerings include: Veeva Systems Inc. | Form 10-K 3 Table of Contents • Veeva OpenData is customer reference data.
Veeva Systems Inc. | Form 10-K 3 Table of Contents Veeva Data Cloud is a modern data platform comprised of connected reference data, deep data, and transaction data. The platform is designed to bring greater efficiency and precision across clinical and commercial operations of a life sciences company: • Veeva OpenData is customer reference data.
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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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In addition, we offer multichannel CRM applications that can enhance and extend our core 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.
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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.
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All support the life sciences industry’s unique commercial business processes and regulatory compliance requirements with highly specialized functionality. Veeva CRM and some of its applications are built on a platform provided by Salesforce, Inc. and will be supported until September 1, 2030.
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Our solution undergoes internal vulnerability testing prior to release, and we employ third parties to perform penetration and vulnerability tests on our solutions on at least an annual basis. We also obtain independent third-party audit opinions related to security and availability annually, such as SOC 2 Type 2 reports and ISO 27001 attestation reports.
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Veeva Vault CRM is our next generation CRM solution that is built on our proprietary Veeva Vault platform and will include the full functionality of Veeva CRM.
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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).
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R&D Business Consulting enables continuous and sustainable innovation across the drug development 4 Veeva Systems Inc. | Form 10-K Table of Contents value chain, including process efficiency, time-to-market acceleration, and optimized operating model and governance. Our Customers As of January 31, 2024, we served 1,432 customers.
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Veeva is also registered as a data broker as required by the California Attorney General. In addition, Veeva maintains privacy policies and procedures and role-based privacy awareness training. For more information about our privacy practices, please visit veeva.com/privacy.
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For 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.
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While we experience intense competition for talent, we believe we have been effective at attracting and retaining talented employees. Research and Development Our R&D organization is responsible for the design, development, and testing of our solutions and applications.
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Our program focuses on the implementation of policies, procedures, and agreements to comply with applicable data privacy laws and regulations as well as data privacy requirements of customers and partners; the creation and maintenance of privacy documentation to demonstrate compliance with applicable data privacy laws and regulations, including legal transfer mechanisms; the process by which we obtain personal information through lawful and transparent means; the process by which we process personal information; the process by which we notify customers and data subjects in a timely manner in the event of a data breach, as required by contract or law; and the training of employees and contractors engaged in the processing of personal information.

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. • 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.
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 customers to our Vault CRM applications built on 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. • Over the longer term our revenue growth rates are likely to fluctuate from year to year and may decline, 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 changes in interest rates, volatility in the financial sector, concerns about a possible domestic or global recession, currency exchange fluctuations, the Russian invasion of Ukraine, and the Israel-Hamas conflict 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. • Changing laws and regulations, including increasingly complex data privacy and information security regulations, in the U.S. and internationally, life sciences industry regulations, and trade policies, may impose additional costs for compliance, reduce demand for our solutions, and subject us to significant liabilities.
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.
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 16 Veeva Systems Inc. | Form 10-K Table of Contents estimated market is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.
In addition and although we maintain a supplier security evaluation process, if the third-party software we use has errors, security vulnerabilities, or otherwise malfunctions, the functionality of our solutions may be negatively impacted, our customers may experience reduced service levels, and our business may suffer.
In addition, although we maintain a supplier security evaluation process, if the third-party software we use has errors, security vulnerabilities, or otherwise malfunctions, the functionality of our solutions may be negatively impacted, our customers may experience reduced service levels, and our business may suffer.
Additionally, if in the future we are unable to comply with the requirements of the Sarbanes-Oxley Act in a timely manner, are unable to assert that our internal controls over financial reporting are effective, identify material weaknesses in our internal controls over financial reporting, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock could be adversely affected, and we could become subject to investigations by the NYSE, the SEC, or other regulatory authorities, which could require additional financial and management resources.
Additionally, if in the future we are unable to comply with the requirements of the Sarbanes-Oxley Act in a timely manner, are unable to assert that our internal controls over financial reporting are effective, identify material weaknesses in our internal controls over financial reporting, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be adversely affected, and we could become subject to investigations by the NYSE, the SEC, or other regulatory authorities, which could require additional financial and management resources.
Our solutions involve the storage and transmission of our customers’ proprietary information (including personal or identifying information regarding their employees and the medical professionals whom their sales personnel contact, and sensitive proprietary data related to the clinical trial, regulatory submission and sales and marketing processes for medical treatments), personal information of medical professionals, personal information (which may include personal health information) of patients and clinical trial participants, and other sensitive information.
Our solutions involve the storage, transmission, and other processing of our customers’ proprietary information (including personal or identifying information regarding their employees and the medical professionals whom their sales personnel contact, and sensitive proprietary data related to the clinical trial, regulatory submission and sales and marketing processes for medical treatments), personal information of medical professionals, personal information (which may include personal health information) of patients and clinical trial participants, and other sensitive information.
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.
Further, we have experienced and will continue to experience fluctuations in our net income as a result of transaction gains or losses related to 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.
Such tax assessments, penalties and interest or future requirements, including based on changes in tax laws, may adversely affect our results of operations. We believe that our financial statements reflect adequate reserves to cover such a contingency, but there can be no assurances in that regard.
Such tax assessments, penalties and interest or future requirements, including based on changes in tax laws, may adversely affect our results of operations. We believe that our consolidated financial statements reflect adequate reserves to cover such a contingency, but there can be no assurances in that regard.
The market price of our Class A common stock might also decline in reaction to events that affect other companies within, or outside, our industry even if these events do not directly affect us. Some companies that have experienced volatility in the trading price of their stock have been the subject of securities class action litigation.
The market price of our common stock might also decline in reaction to events that affect other companies within, or outside, our industry even if these events do not directly affect us. Some companies that have experienced volatility in the trading price of their stock have been the subject of securities class action litigation.
It is also possible that such problems could result in losses of customer data. Since our customers use our solutions for important aspects of their business, any errors, defects, disruptions, service degradations, or other performance problems with our solutions, could hurt our reputation and may damage our customers’ businesses.
It is also possible that such problems could result in losses of customer data. Since our customers use our solutions for important aspects of their businesses, any errors, defects, disruptions, service degradations, or other performance problems with our solutions, could hurt our reputation and may damage our customers’ businesses.
Negative publicity related to a decision by us to initiate such enforcement actions against a customer or former customer, regardless of its accuracy, may adversely impact our other customer relationships or prospective customer relationships, harm our brand and business and could cause the market price of our Class A common stock to decline.
Negative publicity related to a decision by us to initiate such enforcement actions against a customer or former customer, regardless of its accuracy, may adversely impact our other customer relationships or prospective customer relationships, harm our brand and business and could cause the market price of our common stock to decline.
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.
If the perceived value of our equity awards declines, including as a result of prolonged declines in the market price of our common stock or changes in perception about our future prospects, it may adversely affect our ability to recruit and retain highly skilled employees.
For example, as disclosed elsewhere in this report, we are in active litigation with IQVIA and Medidata. In addition, our competitors may offer price concessions, delayed payment terms, or other more favorable terms and conditions in light of the recent macroeconomic environment.
For example, as disclosed elsewhere in this report, we are in active litigation with IQVIA. In addition, our competitors may offer price concessions, delayed payment terms, or other more favorable terms and conditions in light of the recent macroeconomic environment.
For instance, IQVIA currently will not consent that customers using its healthcare professional or healthcare organization data may upload such data to Veeva Network Customer Master and this has negatively affected sales and customer adoption of Veeva Network Customer Master.
For instance, IQVIA currently will not consent that customers using its healthcare professional or healthcare organization data may upload such data to Veeva Network and this has negatively affected sales and customer adoption of Veeva Network.
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 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 1.
Our investments may not yield a favorable return to our investors and may negatively impact the price of our Class A common stock. A loss on our investments may also negatively impact our liquidity, which in turn may hurt our ability to invest in our business.
Our investments may not yield a favorable return to our investors and may negatively impact the price of our common stock. A loss on our investments may also negatively impact our liquidity, which in turn may hurt our ability to invest in our business.
As a result, our stock price has declined significantly in recent periods, and we expect the trading price of our Class A common stock will likely continue to be volatile for the foreseeable future.
As a result, our stock price has declined significantly in recent periods, and we expect the trading price of our common stock will likely continue to be volatile for the foreseeable future.
However, many companies that provide cloud-based software report changes in deferred revenue or billings as key operating or financial metrics, and it is possible that analysts or investors may view these metrics as important. Thus, any changes in our deferred revenue balances or deferred revenue trends could adversely affect the market price of our Class A common stock.
However, many companies that provide cloud-based software report changes in deferred revenue or billings as key operating or financial metrics, and it is possible that analysts or investors may view these metrics as important. Thus, any changes in our deferred revenue balances or deferred revenue trends could adversely affect the market price of our common stock.
In order for our customers to upload such data to the Veeva CRM, Veeva Network Customer Master, Veeva Nitro, and other Veeva applications, such third-party data providers typically must consent to such uploads and often require that we enter into agreements regarding our obligations with respect to such data, which include confidentiality obligations and intellectual property rights with respect to such third-party data.
In order for our customers to upload such data to the Veeva CRM, Veeva Network, Veeva Nitro, and other Veeva applications, such third-party data providers typically must consent to such uploads and often require that we enter into agreements regarding our obligations with respect to such data, which include confidentiality obligations and intellectual property rights with respect to such third-party data.
For example, Veeva Crossix processes third-party health and non-health data for U.S. patients. Additionally, we maintain and process other confidential, proprietary, and sensitive business information, including personal information relating to our employees and contractors and confidential information relating to our solutions and business.
For example, Veeva Crossix and Veeva Compass process third-party health and non-health data for U.S. patients. Additionally, we maintain and process other confidential, proprietary, and sensitive business information, including personal information relating to our employees and contractors and confidential information relating to our solutions and business.
In addition, if the market for technology stocks or the stock market in general experiences uneven investor confidence, the market price of our Class A common stock could decline for reasons unrelated to our business, operating results or financial condition.
In addition, if the market for technology stocks or the stock market in general experiences uneven investor confidence, the market price of our common stock could decline for reasons unrelated to our business, operating results or financial condition.
ITEM 1A. RISK FACTORS. Investing in our Class A common stock involves a high degree of risk.
ITEM 1A. RISK FACTORS. Investing in our common stock involves a high degree of risk.
For example, changes in exchange rates negatively affected our revenues as expressed in U.S. dollars for the fiscal year ended January 31, 2023, and may negatively affect our revenues for the fiscal year ending January 31, 2024 as expressed in U.S. dollars as well.
For example, changes in exchange rates negatively affected our revenues as expressed in U.S. dollars for the fiscal years ended January 31, 2024 and 2023, and may negatively affect our revenues for the fiscal year ending January 31, 2025 as expressed in U.S. dollars as well.
Our Class A common stock price has been and will likely continue to be volatile. The trading price of our Class A common stock has been, and will likely continue to be, volatile for the foreseeable future. In addition, the trading prices of the securities of technology companies have been highly volatile.
The trading price of our common stock has been, and will likely continue to be, volatile for the foreseeable future. In addition, the trading prices of the securities of technology companies have been highly volatile.
Unauthorized access or other security breaches or incidents, as a result of third-party action (e.g., cyber-attacks, or the introduction into our networks or systems of ransomware or other malware), employee or contractor error or malfeasance, product defect, or otherwise, could result in the loss of information, inappropriate access to or use, unavailability, modification, destruction, or other processing of information, loss of intellectual property, service interruption, service degradation, outages, service level credits, claims, demands, litigation, regulatory investigations and other proceedings, indemnity obligations, damage to our reputation, and other liability.
Unauthorized access or other security breaches or incidents, as a result of third-party action (e.g., cyber-attacks, or the introduction into our networks or systems of ransomware or other malware), employee or contractor error or malfeasance, product defect, or otherwise, have resulted in and could in the future result in the loss of information or intellectual property, inappropriate access to or use, disclosure, unavailability, modification, destruction, or other processing of information, service interruption, degradation, disruption, and outages, service level credits, claims, demands, litigation, regulatory investigations and other proceedings, indemnity obligations, damage to our reputation, and other liability.
If we are unsuccessful migrating our multichannel CRM applications to the Veeva Vault platform, encounter disruptions or other problems in the migration process, or our customers do not migrate to the Veeva Vault platform in a timely manner, or at all, our business, operating results and brand could be materially and adversely affected.
If we are unsuccessful migrating our Veeva CRM customers to Vault CRM, encounter disruptions or other problems in the migration process, or our customers do not migrate to the Vault CRM in a timely manner, or at all, our business, operating results, and brand could be materially and adversely affected.
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.
Increasingly complex regulations relating to privacy, data protection, and cybersecurity are burdensome, may reduce demand for our solutions, and non-compliance may impose significant liabilities. Our customers use our solutions to collect, use, store, disclose, and otherwise process personal data regarding their employees, healthcare professionals, and patients. Patient data may include sensitive health data.
For example, since January 2017, we have been defending against assertions of trade secret misappropriation made by our competitor, IQVIA, as described in note 14 of the notes to our consolidated financial statements and other competitors have asserted similar claims in the past.
For example, since January 2017, we have been defending against assertions of trade secret misappropriation made by our competitor, IQVIA, as described in note 1 4 of the notes to our consolidated financial statements and other competitors have asserted similar claims in the past.
Accordingly, the market price of our Class A common stock is likely to be subject to wide fluctuations in response to numerous factors, many of which are beyond our control.
Accordingly, the market price of our common stock is likely to be subject to wide fluctuations in response to numerous factors, many of which are beyond our control.
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.
Our certificate of incorporation and bylaws contain provisions that could depress the market price of our 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.
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.
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 and Russia, 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 in response to the continuing conflict in Ukraine, which could ban the use of our products by companies or users in Russia; • public health crises, such as epidemics and pandemics; and Veeva Systems Inc. | Form 10-K 13 Table of Contents • unstable regional and economic political conditions or armed conflicts in the markets in which we operate, including as a result of the Russian invasion of Ukraine and the Israel-Hamas conflict.
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.
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, Chinese Yuan, and Hungarian Forint, and may be adversely affected in the future due to changes in foreign currency exchange rates.
Our certificate of incorporation and bylaws provide for exclusive forums for certain disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Our bylaws provide for exclusive forums for certain disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
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.
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 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; • securities or industry analysts downgrading our 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 30 Veeva Systems Inc. | Form 10-K Table of Contents 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 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.
Our Veeva Commercial Cloud and Veeva Development Cloud applications also compete to replace client server-based legacy solutions offered by companies such as Oracle, Microsoft Corporation, and other smaller application providers.
Certain of our customers or potential customers may also be negatively impacted by recent volatility in the financial sector (including the failure of Silicon Valley Bank) and may find access to debt and other financing more difficult as a result. • Changes in market conditions and practices within the life sciences industry —The expiration of key patents, the implications of precision medicine treatments, changes in the practices of prescribing physicians and patients, changes with respect to payer relationships, the policies and preferences of healthcare professionals and healthcare organizations with respect to the sales and marketing efforts of Veeva Systems Inc. | Form 10-K 17 Table of Contents life sciences companies, and changes in the regulation of the sales and marketing efforts and pricing practices of life sciences companies.
Certain of our customers or potential customers may also be negatively impacted by high interest rates and recent volatility in the financial sector and may find access to debt and other financing more difficult as a result. • Changes in market conditions and practices within the life sciences industry —The expiration of key patents, the implications of precision medicine treatments, changes in the practices of prescribing physicians and patients, changes with respect to payer relationships, the policies and preferences of Veeva Systems Inc. | Form 10-K 17 Table of Contents healthcare professionals and healthcare organizations with respect to the sales and marketing efforts of life sciences companies, and changes in the regulation of the sales and marketing efforts and pricing practices of life sciences companies.
Our Veeva CRM application (and certain of our multichannel CRM applications) are built on a platform provided by Salesforce, Inc. that utilizes hosting and computing infrastructure provided by Salesforce, Inc. However, as discussed in more detail above, we intend to migrate our applications built on the Salesforce platform to our Veeva Vault platform.
Our Veeva CRM application (and certain of our multichannel CRM applications) are built on a platform provided by Salesforce, Inc. that utilizes hosting and computing infrastructure provided by Salesforce, Inc. However, as discussed in more detail above, we intend to migrate our Veeva CRM customers to Vault CRM, which is built on our Veeva Vault platform.
Also, particularly with respect to our Commercial Solutions orders, because the term of orders for additional end users or applications is commonly less than one year, the annualized value of such orders may not be completely reflected in deferred revenue at any single point in time.
Also, particularly with respect to expansion orders for our Commercial Solutions, because the term of orders for additional end users or applications is commonly less than one year to align to the renewal date of existing Commercial Solutions orders, the annualized value of such orders may not be completely reflected in deferred revenue at any single point in time.
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.
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.
Certain of our customers may be either business associates or covered entities under HIPAA, which means we must maintain a HIPAA compliance program. There is also the potential for the U.S. federal government to pass additional data privacy laws.
Certain of our customers may be either business associates or covered entities under HIPAA, which means we must maintain a HIPAA compliance program. There is also the potential for the U.S. federal government to pass additional data privacy laws. U.S. federal and state data privacy laws are rapidly evolving.
In addition, starting in February 1, 2023, our master subscription agreements that govern multi-year orders generally include a right to terminate the master subscription agreement for convenience and certain customers may exercise that right prior to the contracted end date.
In addition, our master subscription agreements that govern multi-year orders generally include a right to terminate the master subscription agreement for convenience and certain customers may exercise that right prior to the contracted end date.
Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results. In addition, if an acquired business fails to meet our expectations, our operating results, business, and financial position may suffer.
Acquisitions could also use substantial portions of our available cash and result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results. In addition, if an acquired business fails to meet our expectations, our operating results, business, and financial position may suffer.
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.
Our plans to migrate our CRM customers to our Vault CRM applications built on 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.
Department of Health and Human Services promulgated privacy and security rules under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) that cover protected health information (PHI) by limiting use and disclosure and giving individuals the right to access, amend, and seek accounting of their PHI.
In the United States, the U.S. Department of Health and Human Services promulgated privacy and security rules under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) that cover protected health information (PHI) by limiting use and disclosure and giving individuals the right to access, amend, and seek accounting of disclosures of their PHI.
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.
In our fiscal years ended January 31, 2024, 2023, and 2022, our subscription services revenues grew by 10%, 17%, and 26% respectively, as compared to subscription services revenues from the prior fiscal years.
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.
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 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.
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.
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 Veeva Systems Inc. | Form 10-K 23 Table of Contents • 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.
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.
While we expect that, in large part, traditional Delaware corporation law principles and the application of those principles in case law—including those related to self-dealing, conflicts of interest, and the application of the business judgment rule—will continue to apply with respect to Delaware PBCs, there is currently limited case law involving PBCs, which may create legal uncertainty or additional litigation risk until additional case law develops.
We rely on our reputation and recommendations from key customers in order to promote our solutions to potential customers, which we call “reference selling.” The loss of any of our key customers, or a failure of one or more of them to renew or expand user subscriptions for some or all our products, could have a significant impact on the growth rate of our revenues, our reputation, and our ability to obtain new customers.
We rely on our reputation and recommendations from key customers in order to promote our solutions to potential customers, which we call “reference selling.” The loss of any of our key customers, or a failure of one or more of them to renew or expand user subscriptions for some or all our products, could have a significant impact on the growth rate of our revenues, our reputation, and our ability to obtain new Veeva Systems Inc. | Form 10-K 11 Table of Contents customers.
It is possible that our risk of cyber-attack and other sources of security breaches and incidents may be elevated as a result of Russia’s invasion of Ukraine due to an increase in cyber-attack attempts on us, our customers, our partners, or our technology infrastructure providers.
It is possible that our risk of cyber-attack and other sources of security breaches and incidents may be elevated as a result of Russia’s invasion of Ukraine, the Israel-Hamas conflict, or other geopolitical tensions or conflicts, due to an increase in cyber-attack attempts on us, our customers, our partners, or our technology infrastructure providers.
Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation or bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
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.
In our fiscal years ended January 31, 2024, 2023, and 2022, our top 10 customers accounted for 28%, 29%, and 31% of our total revenues, respectively.
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.
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 12 Veeva Systems Inc. | Form 10-K Table of Contents 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.
“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.
“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; • international expansion; • acquisitions and investments; and • general operations, IT systems, facilities, and administration, including legal and accounting expenses.
Additionally, the gross margin generated from professional services fees fluctuates based on a number of factors which may vary from period to period, including the average billable hours worked by our billable professional services personnel, our average hourly rates for professional services and the margin on professional services subcontracted to our third-party systems integrator partners.
Additionally, the gross margin generated from professional services fees fluctuates based on a number of factors which may vary from period to period, including the average billable hours worked by our billable professional services personnel, 24 Veeva Systems Inc. | Form 10-K Table of Contents our average hourly rates for professional services, and the margin on professional services subcontracted to our third-party systems integrator partners.
You should consider carefully the risks and uncertainties described below and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” together with all of the other information in this report, including our consolidated financial statements and related notes, before investing in our Class A common stock.
You should consider carefully the risks and uncertainties described below and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” together with all of the other information in this report, including our consolidated financial statements and related notes, before investing in our common stock. The risks and uncertainties described below are not the only ones we face.
Many of the risks associated with the use of open source software cannot be eliminated and could adversely affect our business. Risks Related to Our Financial Performance, How We Contract with Customers, and the Financial Position of Our Business Our historic growth rates of total revenues and subscription services revenues should not be viewed as indicative of our future performance.
Many of the risks associated with the use of open source software cannot be eliminated and could adversely affect our business. 22 Veeva Systems Inc. | Form 10-K Table of Contents Risks Related to Our Financial Performance, How We Contract with Customers, and the Financial Position of Our Business Our historic growth rates of total revenues and subscription services revenues should not be viewed as indicative of our future performance.
Our core Veeva CRM application has achieved substantial market penetration of pharmaceutical and biotechnology companies. If our efforts to sustain or further increase the use and adoption of our core CRM application do not succeed, the growth of our Commercial Solutions revenues may be negatively impacted.
Veeva Systems Inc. | Form 10-K 15 Table of Contents Our core Veeva CRM application has achieved substantial market penetration of pharmaceutical and biotechnology companies. If our efforts to sustain or further increase the use and adoption of our core CRM application do not succeed, the growth of our Commercial Solutions revenues may be negatively impacted.
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.
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.
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 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., a global pandemic), fire, extreme weather event, power loss, telecommunications failure, cyber-attack, armed conflicts (including the Russian invasion of Ukraine and the Israel-Hamas conflict), 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 14 Veeva Systems Inc. | Form 10-K Table of Contents security, loss of key employees, and loss of critical data, all of which could have an adverse effect on our future operating results.
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.
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.
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.
These provisions among other things: • 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.
If enacted, this agreement may also introduce rules that would result in the reallocation of certain taxing rights from multinational companies from their home countries to the markets where they have business activities and earn profits—regardless of physical presence. We continue to monitor the developments and tax implications surrounding changes in the global tax environment, including the OECD minimum tax.
Upon enactment, this agreement will also introduce rules that will result in the reallocation of certain taxing rights from multinational companies from their home countries to the markets where they have business activities and earn profits—regardless of physical presence. We continue to monitor and assess the developments and implications surrounding changes in the global tax environment, including Pillar Two.
However, we recently announced our intent to migrate our applications built on the Salesforce platform to our Veeva Vault platform and we do not intend to renew our agreement with Salesforce, Inc. when the current term expires on September 1, 2025.
However, on December 1, 2022, we announced our intent to migrate our Veeva CRM customers to Vault CRM, which is built on our Veeva Vault platform, and we do not intend to renew our agreement with Salesforce, Inc. when the current term expires on September 1, 2025.
The purchase of our solutions may involve a significant commitment of capital and other resources. In 2022, there was a reduction in funding for early-stage life sciences companies, which resulted in reduced sales and adversely affected our financial results for the fiscal year ended January 31, 2023 and may continue for the foreseeable future.
The purchase of our solutions may involve a significant commitment of capital and other resources. Since 2022, there has been a reduction in funding for early-stage life sciences companies, which has resulted in reduced sales and adversely affected our financial results and may continue for the foreseeable future.
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.
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.
We recently announced plans to migrate our multichannel CRM applications from the Salesforce platform to our Veeva Vault platform, as discussed in more detail below, which could lead to customers choosing competitors that continue to use the Salesforce platform, or other CRM application providers, over us.
In December 2022, we announced plans to migrate customers of our multichannel CRM applications built on the Salesforce platform to CRM solutions that are built on our own Veeva Vault platform, as discussed in more detail below, which could lead to customers choosing competitors that continue to use the Salesforce platform, or other CRM application providers, over us.
Uncertain macroeconomic and geopolitical factors in recent periods, including as a result of global inflationary pressures and rising interest rates, concerns about a possible domestic or global recession, currency exchange fluctuations, the Russian invasion of Ukraine, and continuing uncertainty surrounding the effects of COVID-19, have led to volatility in the stock market.
Uncertain macroeconomic and geopolitical factors in recent periods, including as a result of global inflationary pressures and changes in interest rates, concerns about a possible domestic or global recession, currency exchange fluctuations, the Russian invasion of Ukraine, and the Israel-Hamas conflict have led to volatility in the stock market.
It is uncertain whether these newer solutions will continue to grow as a percentage of revenues at a pace significant enough to support our expected overall growth. For example, we have limited experience selling our Veeva Compass offering for longitudinal patient data, and our MyVeeva for Patients solution that enables remote patient interactions for clinical trials.
It is uncertain whether these newer solutions will continue to grow as a percentage of revenues at a pace significant enough to support our expected overall growth. For example, we have limited experience selling certain of our data and analytics offerings and certain of our solutions that enable remote patient interactions for clinical trials.
Bureau of Labor and Statistics for the month of August of the prior calendar year. If this increase results in reduced renewal rates, our business and results of operations will be adversely affected. Further, our customers may negotiate terms less advantageous to us upon renewal, which could reduce our revenues from these customers.
If this increase results in reduced renewal rates, our business and results of operations will be adversely affected. Further, our customers may negotiate terms less advantageous to us upon renewal, which could reduce our revenues from these customers.
We also rely on copyright, trade secret and trademark laws, trade secret protection and confidentiality or license agreements with our employees, customers, partners and others to protect our intellectual property rights. However, the steps we take to protect our intellectual property rights may be inadequate.
We also rely on copyright, trade secret and trademark laws, trade secret protection and confidentiality or license agreements with our employees, customers, partners, consultants and others to protect our intellectual property rights.
The risks and uncertainties described below are not the only ones we face. If any of the following risks actually occurs, our business, financial condition, results of operations, and prospects could be materially and adversely affected. In that event, the price of our Class A common stock could decline and you could lose part or all of your investment.
If any of the following risks actually occurs, our business, financial condition, results of operations, and prospects could be materially and adversely affected. In that event, the price of our common stock could decline and you could lose part or all of your investment.
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.
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 currently depend on the Salesforce platform to deliver our multichannel CRM applications, but we recently announced plans to migrate those applications to our Veeva Vault platform. We also recently announced that we do not intend to renew our agreement with Salesforce, Inc. for use of the Salesforce platform.
We currently depend on the Salesforce platform to deliver our multichannel CRM applications, but in December 2022 we announced plans to migrate our CRM customers to our Vault CRM solutions, which are built on our Veeva Vault platform. We also announced that we do not intend to renew our agreement with Salesforce, Inc. for use of the Salesforce platform.
Furthermore, we have in the past and may in the future be subject to inspections or audits by government agencies or other regulatory bodies to verify our customers’ compliance with applicable laws, regulations, or GxP principles.
Furthermore, we have in the past and may in the future be subject to inspections or 18 Veeva Systems Inc. | Form 10-K Table of Contents audits by government agencies or other regulatory bodies to verify our customers’ compliance with applicable laws, regulations, or GxP principles.
If our competitors’ products, services, or technologies become more accepted than our solutions, if they are successful in bringing their products or services to market earlier than we are, if their products or services are more technologically capable than ours, or if customers replace our solutions with custom-built software, then our revenues could be adversely affected.
If our competitors’ products, services, or technologies become more accepted than our solutions, if they are successful in bringing their products or services to market earlier than we are, if their products or services are more technologically capable than ours (including as a result of new or better use of evolving artificial intelligence (AI) technologies), or if customers replace our solutions with custom-built software, then our revenues could be adversely affected.
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.
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.
In our fiscal year ended January 31, 2023, we derived approximately 55% of our subscription services revenues and approximately 52% of our total revenues from our Commercial Solutions. In our fiscal quarter ended January 31, 2023, we derived approximately 53% of our subscription services revenues and approximately 51% of our total revenues from our Commercial Solutions.
In our fiscal year ended January 31, 2024, we derived approximately 52% of our subscription services revenues and approximately 50% of our total revenues from our Commercial Solutions. In our fiscal quarter ended January 31, 2024, we derived approximately 50% of our subscription services revenues and approximately 49% of our total revenues from our Commercial Solutions.
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.
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 common stock to decline substantially, and our investors could incur substantial losses. Our subscription agreements with our customers are typically for a term of one year.
Additionally, we have adopted a permanent “Work Anywhere” policy, which generally gives employees the flexibility to work in an office or at home on any given day, with certain job-specific restrictions. While we believe this program is beneficial to our business, we have limited experience with the program.
Additionally, we have adopted a “Work Anywhere” policy, which generally gives employees the flexibility to work in an office or at home on any given day, with certain job-specific restrictions.
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.
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 common stock.

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Item 2. Properties

Properties — owned and leased real estate

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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.
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, 2025 and may further expand our facilities capacity after January 31, 2025 as our employee base grows.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeDiscovery 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.
Biggest changeDiscovery is proceeding and no trial date has been set. On February 13, 2023, Veeva and Sparta entered into a confidential settlement agreement dismissing their claims against each other. On January 16, 2024, Veeva and Medidata also entered into a confidential settlement agreement dismissing their claims against each other. The only defendant now in the case is IQVIA.
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.
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 June 9, 2023, IQVIA filed a counter-complaint seeking a declaration that its non-compete agreements comply with California law.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+1 added−1 removed4 unchanged
Biggest changeMarket 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.
Biggest changeMarket Price of Common Stock Our common stock is listed on the New York Stock Exchange under the symbol “VEEV.” 34 Veeva Systems Inc. | Form 10-K Table of Contents Stockholders As of January 31, 2024, we had 21 holders of record of our common stock.
The actual number of holders of Class A common stock is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
The actual number of holders of common stock is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
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.
The chart assumes $100 was invested at the close of market on January 31, 2019 in the 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. The stock price performance on the following graph is not necessarily indicative of future stock price performance.
Removed
The 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].
Added
Veeva Systems Inc. | Form 10-K 35 Table of Contents January 31, 2019 2020 2021 2022 2023 2024 Veeva Systems Inc. 100.00 134.43 253.48 216.89 156.38 190.18 S&P 500 100.00 121.68 142.67 175.90 161.45 195.06 S&P 1500 Application Software Index 100.00 133.60 176.27 195.48 158.36 238.99 ITEM 6. [RESERVED].

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 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 .
Biggest changeDeferred Revenue, Performance Obligations, and Unbilled Accounts Receivable 70 Note 10. Leases 71 Note 11. Stockholders’ Equity 71 Note 12. Other Income 74 Note 13. Net Income per Share 74 Note 14. Commitments and Contingencies 75 Note 15. Revenues by Product 78 Note 16. Information about Geographic Areas 78 Table of Contents Note 17. 401(k) Plan 78
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.
Quantitative and Qualitative Disclosures About Market Risk 48 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 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 .
Summary of Business and Significant Accounting Policies 57 Note 2. Short-Term Investments 63 Note 3. Deferred Costs 64 Note 4. Property and Equipment, Net 65 Note 5. Goodwill and Intangible Assets 65 Note 6. Accrued Expenses 66 Note 7. Fair Value Measurements 66 Note 8. Income Taxes 68 Note 9.
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.
Item 6. [Reserved] 36 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36 Overview 37 Components of Results of Operations 37 Results of Operations 40 Operating Expenses and Operating Margin 42 Non-GAAP Financial Measures 43 Liquidity and Capital Resources 46 Critical Accounting Policies and Estimates 47 Item 7A.
Removed
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

76 edited+5 added−29 removed52 unchanged
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.
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. 44 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, 2024 2023 (in thousands) Net cash provided by operating activities on a GAAP basis $ 911,339 $ 780,470 Excess tax benefits from employee stock plans $ (71,049) $ (82,009) Net cash provided by operating activities on a non-GAAP basis $ 840,290 $ 698,461 Net cash used in investing activities on a GAAP basis $ (1,076,351) $ (1,007,683) Net cash used in financing activities on a GAAP basis $ (16,188) $ (19,376) Operating income on a GAAP basis $ 429,334 $ 459,091 Stock-based compensation expense 393,733 351,907 Amortization of purchased intangibles 19,459 19,464 Operating income on a non-GAAP basis $ 842,526 $ 830,462 Net income on a GAAP basis $ 525,705 $ 487,706 Stock-based compensation expense 393,733 351,907 Amortization of purchased intangibles 19,459 19,464 Income tax effect on non-GAAP adjustments (1) (147,937) (163,508) Net income on a non-GAAP basis $ 790,960 $ 695,569 Diluted net income per share on a GAAP basis $ 3.22 $ 3.00 Stock-based compensation expense 2.41 2.17 Amortization of purchased intangibles 0.12 0.12 Income tax effect on non-GAAP adjustments (1) (0.91) (1.01) Diluted net income per share on a non-GAAP basis $ 4.84 $ 4.28 (1) For the fiscal years ended January 31, 2024 and 2023, we used an estimated annual effective non-GAAP tax rate of 21% Veeva Systems Inc. | Form 10-K 45 Table of Contents Liquidity and Capital Resources Fiscal year ended January 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 911,339 $ 780,470 $ 764,463 Net cash used in investing activities (1,076,351) (1,007,683) (346,152) Net cash used in financing activities (16,188) (19,376) (4,140) Effect of exchange rate changes on cash and cash equivalents (1,780) (4,986) (4,657) Net change in cash and cash equivalents $ (182,980) $ (251,575) $ 409,514 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.
Professional services revenues are affected primarily by our customers’ demands for implementation services, configuration, data services, training, speakers bureau logistics, and managed services in connection with our solutions. Our business consulting revenues are affected primarily by our customers’ demands for services related to a particular customer success initiative, strategic analysis, or business process change, and not a cloud software implementation.
Professional services revenues are affected primarily by our customers’ demands for implementation services, configuration, data services, training, speakers bureau logistics, and managed services in connection with our solutions. Our business consulting revenues are affected primarily by our customers’ demands for services related to a particular customer success initiative, strategic analysis, or business process change, and not by cloud software implementation.
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.
If a customer adds end users or additional Commercial Solutions to an existing order for our Veeva CRM application, such additional orders will generally be coterminous with the anniversary date of the 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.
For Veeva Crossix, we do not count as distinct customers agencies contracting with us on behalf of brands within life sciences companies. New subscription orders for our core Veeva CRM application generally have a one-year term.
For Veeva Crossix, we do not count as distinct customers agencies contracting with us on behalf of brands within life sciences companies. New subscription orders for our Veeva CRM application generally have a one-year term.
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 through commercialization.
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.
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.” 36 Veeva Systems Inc. | Form 10-K Table of Contents Overview Veeva is the leading provider of industry cloud solutions for the global life sciences industry.
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.
Veeva Systems Inc. | Form 10-K 43 Table of Contents 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. • Excess tax benefits.
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 Commercial Cloud, Veeva Data Cloud, and Veeva Claims solutions are classified as “Commercial Solutions” revenues, and revenues associated with our Veeva Development Cloud, Veeva RegulatoryOne, and Veeva QualityOne solutions are classified as “R&D Solutions” revenues.
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.
For a discussion of our cash flows for the year ended January 31, 2023 compared to the year ended January 31, 2022, 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, 2023, which is hereby incorporated by reference.
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.
The requirement may also impact 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.
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.
As of January 31, 2024, 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 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.
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 three major product categories —Veeva Development Cloud, Veeva Commercial Cloud, and Veeva Data Cloud.
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 increase in employee compensation-related costs was primarily driven by the increase in headcount during the period. 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.
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.
For the fiscal year ended January 31, 2024, subscription services revenues constituted 80% of total revenues and professional services and other revenues constituted 20% of total revenues.
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.
For the 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.
The following is a discussion of our cash flows for the year ended January 31, 2023 compared to the year ended January 31, 2022.
The following is a discussion of our cash flows for the year ended January 31, 2024 compared to the year ended January 31, 2023.
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.
For such non-cancellable 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 accrue an unbilled accounts receivable balance (a contract asset) related to such orders.
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.
Such changes may 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 compared to if the adjustment had not occurred.
Also, particularly with respect to orders for our Commercial Solutions, because the term of orders for additional end users or applications is commonly less than one year, the annualized value of such orders may not be completely reflected in deferred revenue at any single point in time.
Also, particularly with respect to expansion orders for our Commercial Solutions, because the term of orders for additional end users or applications is commonly less than one year to align to the renewal date of existing Commercial Solutions orders, the annualized value of such orders may not be completely reflected in deferred revenue at any single point in time.
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.
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, Great British Pound Sterling, Chinese Yuan, and Hungarian Forint. We may continue to experience favorable or adverse foreign currency impacts due to volatility in these currencies.
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 geographic mix of subscription services revenues was 58% from North America, 27% from Europe, and 15% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2024, as compared to 57% from North America, 28% from Europe, and 15% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2023.
Note that our net income reflects the impact of excess tax benefits related to equity compensation. Net cash provided by operating activities was $780 million for the fiscal year ended January 31, 2023 compared to $764 million provided by operating activities for the fiscal year ended January 31, 2022.
Note that our net income reflects the impact of excess tax benefits related to equity compensation. Net cash provided by operating activities was $911 million for the fiscal year ended January 31, 2024 compared to $780 million provided by operating activities for the fiscal year ended January 31, 2023.
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 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 costs and costs of delivering our data solutions, expenses associated with computer equipment and software, and allocated overhead.
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.
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. Our non-U.S. cash and cash equivalents are not considered indefinitely reinvested outside the United States, except in certain designated jurisdictions.
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.
We also use cash to invest in capital assets to support our growth. Net cash used in investing activities was $1,076 million for the fiscal year ended January 31, 2024 compared to $1,008 million used in investing activities for the fiscal year ended January 31, 2023.
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 geographic mix of professional services and other revenues was 61% from North America, 32% from Europe, and 7% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2024, as compared to 64% from North America, 29% from Europe, and 7% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2023.
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.
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.
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.
We recognized excess tax benefits of $74 million and $94 million in our provision for income taxes for the fiscal years ended January 31, 2024 and 2023, respectively.
The $662 million increase in cash used in investing activities was primarily due to the net increase in purchases of investments for the fiscal year ended January 31, 2023.
The $69 million increase in cash used in investing activities was primarily due to the net increase in purchases of investments for the fiscal year ended January 31, 2024.
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.
Net cash used in financing activities was $16 million for the fiscal year ended January 31, 2024 compared to $19 million used in financing activities for the fiscal year ended January 31, 2023.
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.
Our primary uses of cash from operating activities are for employee-related expenditures, expenses related to our computing infrastructure (including Amazon Web Services and Salesforce, Inc.), building infrastructure costs (including leases for office space), fees for third-party legal counsel and accounting services, 46 Veeva Systems Inc. | Form 10-K Table of Contents and data acquisition costs.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. Revenue Recognition We derive our revenues primarily from subscription services and professional services. Some of our contracts with customers contain multiple performance obligations.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. Veeva Systems Inc. | Form 10-K 47 Table of Contents Revenue Recognition We derive our revenues primarily from subscription services and professional services. Some of our contracts with customers contain multiple performance obligations.
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.
For our fiscal years ended January 31, 2024, 2023, and 2022, our total revenues were $2,364 million, $2,155 million, and $1,851 million, respectively, representing year-over-year growth in total revenues of 10% in our fiscal year ended January 31, 2024, and 16% in our fiscal year ended January 31, 2023.
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.
For our fiscal years ended January 31, 2024, 2023, and 2022, our subscription services revenues were $1,902 million, $1,733 million, and $1,484 million, respectively, representing year-over-year growth in subscription services revenues of 10% in our fiscal year ended January 31, 2024, and 17% in our fiscal year ended January 31, 2023.
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.
The increase in subscription services revenues consisted of $119 million of subscription services revenue attributable to R&D Solutions and $50 million of subscription services revenue attributable to Commercial Solutions.
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.
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). We have financed our operations primarily through cash generated from operations.
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.
In June 2021, we began funding withholding taxes due on employee RSU awards by net share settlement, rather than our previous approach of requiring employees to either sell shares of our common stock or pay the withholding taxes in cash to cover taxes due upon vesting of such awards.
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.
Provision for Income Taxes Fiscal year ended January 31, 2024 2023 % Change (dollars in thousands) Income before income taxes $ 588,023 $ 509,096 16% Provision for income taxes $ 62,318 $ 21,390 191% Effective tax rate 10.6 % 4.2 % The provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate primarily due to state taxes, tax credits, equity compensation, and foreign income subject to taxation in the United States.
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.
For a discussion of our results of operations for the year ended January 31, 2023 compared to the year ended January 31, 2022, 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, 2023, which is hereby incorporated by reference. 40 Veeva Systems Inc. | Form 10-K Table of Contents Revenues Fiscal year ended January 31, 2024 2023 % Change (dollars in thousands) Revenues: Subscription services $ 1,901,593 $ 1,733,002 10% Professional services and other 462,080 422,058 9% Total revenues $ 2,363,673 $ 2,155,060 10% 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, 2024 increased $209 million, of which $169 million was from growth in subscription services revenues.
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.
Veeva Systems Inc. | Form 10-K 39 Table of Contents Provision for Income Taxes Provision for income taxes consists of federal, 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.
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.
Conversely, affiliated legal entities that maintain distinct master subscription agreements Veeva Systems Inc. | Form 10-K 37 Table of Contents may choose to consolidate their orders under a single master subscription agreement, and, in that circumstance, our customer count would decrease.
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.
The $3 million decrease was primarily related to a decrease of $19 million in proceeds from employee stock option exercises due to decreased stock option activity during the period partially offset by an increase of $16 million used to pay employee taxes related to the net share settlement of RSUs .
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.
As of January 31, 2024, our cash, cash equivalents, and short-term investments totaled $4.0 billion, of which $137 million represented cash and cash equivalents held outside of the United States.
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, 2024, 2023, and 2022, we had 693, 684 and 653 Commercial Solutions customers, respectively, and 1,078, 1025, and 860 R&D Solutions customers, respectively. These customer count totals are net of customer attrition during each period.
Many of our applications for R&D are used by smaller, earlier stage, pre-commercial companies, some of which may not reach the commercialization stage. Thus, the potential number of R&D Solutions customers is higher than the potential number of Commercial Solutions customers.
Many of our applications for R&D are used by smaller, earlier stage, pre-commercial companies, some of which may not reach the commercialization stage. Thus, the potential number of R&D Solutions customers is higher than the potential number of Commercial Solutions customers. Components of Results of Operations Revenues We derive our revenues primarily from subscription services fees and professional services fees.
In the fiscal year ending January 31, 2024, the addition of termination for convenience rights in such master subscription agreements changes the timing of revenue recognition for orders governed by these master subscription agreements and will result in an adverse impact to our revenue for the fiscal year.
In the fiscal year ended January 31, 2024, the addition of termination for convenience rights in such master subscription agreements changed the timing of revenue recognition for such orders governed by these master subscription agreements and reduced our revenue for the fiscal year.
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
Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recorded.
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).
Sales and Marketing Fiscal year ended January 31, 2024 2023 % Change (dollars in thousands) Sales and marketing $ 381,472 $ 348,691 9% Percentage of total revenues 16 % 16 % Sales and marketing expenses for the fiscal year ended January 31, 2024 increased $33 million, primarily due to an increase of $22 million in employee compensation-related costs.
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.
We define the term normalized billings for any period to mean calculated billings adjusted for the impact of term changes in renewal business, such as in the timing (for example, changing the renewal date of multiple products to be coterminous) or billing frequency (for example, changing from annual to quarterly billings).
The increase in excess tax benefits during the fiscal year ended January 31, 2023 was primarily due to our Chief Executive Officer’s exercise of stock options in connection with a previously announced plan.
The decrease in excess tax benefits during the fiscal year ended January 31, 2024 was primarily due to our Chief Executive Officer exercising the remaining portion of stock options in connection with a previously announced plan, which was a smaller amount compared to the prior period.
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.
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. Cost of professional services and other for the fiscal year ended January 31, 2024 increased $35 million, primarily due to employee compensation-related costs.
These increases were partially offset by larger operating expenses due to increases in headcount and a $109 million increase in cash paid for income taxes, net of refunds.
The $131 million increase in operating cash flow was primarily due to increased sales and the related cash collections and a decrease in cash paid for income taxes, net of refunds, which was partially offset by larger operating expenses, primarily due to increases in headcount.
In the fiscal year ending January 31, 2024, the addition of termination for convenience rights in such master subscription agreements changes the timing of revenue recognition for orders governed by these master subscription agreements and will result in an adverse impact to our revenue for the fiscal year.
In the fiscal year ended January 31, 2024, the addition of termination for convenience rights in such master subscription agreements changed the timing of revenue recognition for orders governed by these master subscription agreements and reduced our unbilled revenue balance from such orders, as well as reduced our revenue for the fiscal year.
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.
The increase in professional services and other revenues 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, particularly within R&D solutions and increased demand for our business consulting services.
We expect research and development expenses to increase in the fiscal year ending January 31, 2024, primarily due to higher headcount and continued investment in our product offerings.
We expect research and development expenses to increase in the fiscal year ending January 31, 2025, primarily due to employee compensation-related costs as we continue to invest in our product offerings.
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).
General and Administrative Fiscal year ended January 31, 2024 2023 % Change (dollars in thousands) General and administrative $ 246,545 $ 217,595 13% Percentage of total revenues 10 % 10 % 42 Veeva Systems Inc. | Form 10-K Table of Contents General and administrative expenses for the fiscal year ended January 31, 2024 increased $29 million, primarily due to an increase of $15 million in employee compensation-related costs.
The majority of the increase in cash paid for income taxes was related to the Tax Cuts and Jobs Act of 2017, which eliminated the option to deduct research and development expenditures and required taxpayers to capitalize and amortize them over five or fifteen years.
In the fiscal year ending January 31, 2025, cash payments for income taxes in relation to the Tax Cuts and Jobs Act of 2017, which eliminated the option to deduct research and development expenditures and required taxpayers to capitalize and amortize them over five or fifteen years, are expected to reduce our cash flows from operating activities.
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.
Cost of Revenue and Gross Margin Fiscal year ended January 31, 2024 2023 % Change (dollars in thousands) Cost of revenues: Cost of subscription services $ 290,577 $ 257,635 13% Cost of professional services and other 386,714 351,770 10% Total cost of revenues $ 677,291 $ 609,405 11% Gross margin percentage: Subscription services 85 % 85 % Professional services and other 16 % 17 % Total gross margin percentage 71 % 72 % Gross profit $ 1,686,382 $ 1,545,655 9% Cost of revenues for the fiscal year ended January 31, 2024 increased $68 million, of which $33 million was related to an increase in cost of subscription services.
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.
Subscription services revenues are affected primarily by the number of customers, the scope of the 38 Veeva Systems Inc. | Form 10-K Table of Contents 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.
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.
Since February 1, 2023, our master subscription agreements that govern multi-year orders generally included a termination for convenience right for our customers.
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.
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, calculated billings, or normalized billings are accurate indicators of future revenues for any given period of time.
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.
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, 2024 2023 (in thousands) Consolidated Statements of Comprehensive Income Data: Revenues: Subscription services $ 1,901,593 $ 1,733,002 Professional services and other 462,080 422,058 Total revenues 2,363,673 2,155,060 Cost of revenues (1) : Cost of subscription services 290,577 257,635 Cost of professional services and other 386,714 351,770 Total cost of revenues 677,291 609,405 Gross profit 1,686,382 1,545,655 Operating expenses (1) : Research and development 629,031 520,278 Sales and marketing 381,472 348,691 General and administrative 246,545 217,595 Total operating expenses 1,257,048 1,086,564 Operating income 429,334 459,091 Other income, net 158,689 50,005 Income before income taxes 588,023 509,096 Provision for income taxes 62,318 21,390 Net income $ 525,705 $ 487,706 (1) Includes stock-based compensation as follows: Cost of revenues: Cost of subscription services $ 6,483 $ 6,257 Cost of professional services and other 53,237 50,341 Research and development 172,876 141,571 Sales and marketing 90,865 87,509 General and administrative 70,272 66,229 Total stock-based compensation $ 393,733 $ 351,907 Fiscal Year Ended January 31, 2024 and 2023 The following is a discussion of our results of operations for the year ended January 31, 2024 compared to the year ended January 31, 2023.
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.
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.
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.
We expect sales and marketing expenses to increase in the fiscal year ending January 31, 2025, primarily due to employee compensation-related costs and the increase in marketing program costs related to events.
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.
In our fiscal year ended January 31, 2024, we derived approximately 52% and 48% of our subscription services revenues and 50% and 50% of our total revenues from our Commercial Solutions and R&D Solutions, respectively.
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.
Other Income, Net Fiscal year ended January 31, 2024 2023 % Change (dollars in thousands) Other income, net $ 158,689 $ 50,005 217% Other income, net, for the fiscal year ended January 31, 2024 increased $109 million, primarily due to an increase in interest income of $87 million and a decrease in accretion of discounts on investments of $22 million.
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 .
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 our platforms, including adding new features and applications and increasing the functionality and enhancing the ease of use of our cloud-based applications. Sales and Marketing .
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.
The increase in cost of subscription services was primarily due to an Veeva Systems Inc. | Form 10-K 41 Table of Contents increase of $12 million related to computing infrastructure costs, the majority of which was provided by Amazon Web Services and an increase of $7 million in costs of delivering our data solutions.
We expect the growth rate of our total revenues and subscription services revenues for the fiscal year ending January 31, 2024 to decline compared to the prior fiscal year. We generated net income of $488 million, $427 million, and $380 million for our fiscal years ended January 31, 2023, 2022, and 2021, respectively.
We generated net income of $526 million, $488 million, and $427 million for our fiscal years ended January 31, 2024, 2023, and 2022, respectively. As of January 31, 2024, 2023, and 2022, we served 1,432, 1,388, and 1,205, customers, respectively.
Future tax rates could be affected by changes in tax laws and regulations or by rulings in tax related litigation, as may be applicable. We will continue to identify and analyze other applicable changes in tax laws in the United States and abroad.
Future tax rates could be affected by changes in tax laws and regulations or by rulings in tax related litigation, as may be applicable. For the fiscal years ended January 31, 2024 and 2023, our effective tax rates were 10.6% and 4.2%, respectively.
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.
The increase in employee compensation-related costs was primarily driven by the increase in headcount during the period. We expect general and administrative expenses to continue to increase in the fiscal year ending January 31, 2025, primarily due to employee compensation-related costs.
We are also updating our contracting terms to incorporate an annual inflation adjustment, which will raise the price to each customer upon such customer entering into a new or renewal order form after April 1, 2023 by the lower of 4% or the Consumer Price Index (All Urban Consumer, US City Average, All Items Index) published by the U.S.
In addition, certain of our customer contracts include an annual inflation adjustment, which raises the price to each customer upon renewal by the lower of 4% or the Consumer Price Index (All Urban Consumer, U.S. City Average, All Items Index) published by the U.S. Bureau of Labor and Statistics for the month of August of the prior calendar year.
Solutions formerly categorized as Veeva Data Cloud (Veeva Compass, Veeva Link, and Veeva OpenData) are now part of the Veeva Commercial Cloud offerings.
Veeva Data Cloud is comprised of our data offerings, including Veeva Compass, Veeva Link, and Veeva OpenData.
We expect our operating margin to decrease in the fiscal year ending January 31, 2024 due to the increase in operating expenses and stock-based compensation and the expected negative impact to revenue resulting from the addition of termination for convenience rights in our master subscription agreements, as discussed in “ Comp onents of Results of Operations — Revenues .” 42 Veeva Systems Inc. | Form 10-K Table of Contents Research and Development Fiscal year ended January 31, 2023 2022 % Change (dollars in thousands) Research and development $ 520,278 $ 382,035 36% Percentage of total revenues 24 % 21 % Research and development expenses for the fiscal year ended January 31, 2023 increased $138 million, primarily due to an increase of $132 million in employee compensation-related costs (which includes an increase of $58 million in stock-based compensation).
Research and Development Fiscal year ended January 31, 2024 2023 % Change (dollars in thousands) Research and development $ 629,031 $ 520,278 21% Percentage of total revenues 27 % 24 % Research and development expenses for the fiscal year ended January 31, 2024 increased $109 million, primarily due to an increase of $102 million in employee compensation-related costs.
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.
During the fiscal year ended January 31, 2024 as compared to the prior year period, our effective tax rate increased primarily due to a decrease in excess tax benefits, partially offset by the release of tax reserves for uncertain tax positions.
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.
The increase in employee compensation-related costs was primarily driven by the increase in headcount during the period to support our sales and marketing efforts associated with our product offerings.
Removed
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.
Added
We define the term calculated billings for any period to mean revenue for the period plus the change in deferred revenue from the immediately preceding period minus the change in unbilled accounts receivable from the immediately preceding period.
Removed
For more information on our status as a PBC and associated risks, see “Risk Factors.” 36 Veeva Systems Inc. | Form 10-K Table of Contents Components of Results of Operations Revenues We derive our revenues primarily from subscription services fees and professional services fees.
Added
Other Income, Net Other income, net, consists primarily of interest income, amortization of premiums paid or accretion of discounts on investments, and transaction gains or losses on foreign currency, net of hedging costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−1 removed7 unchanged
Biggest changeInterest 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.
Biggest changeThis 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, and foreign government bonds. 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.
For the fiscal year ended January 31, 2023, about 83% of our revenues and about 80% of our expenses were denominated in USD, respectively.
For the fiscal year ended January 31, 2024, about 83% of our revenues and about 80% of our expenses were denominated in USD, respectively.
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.
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, Chinese Yuan, and Hungarian Forint, and may be adversely affected in the future due to changes in foreign currency exchange rates.
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.
An immediate increase of 100-basis points in interest rates would have resulted in a $43 million market value reduction in our investment portfolio as of January 31, 2024. An immediate decrease of 100-basis points in interest rates would have increased the market value by $43 million as of January 31, 2024.
Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.
Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if 48 Veeva Systems Inc. | Form 10-K Table of Contents interest rates fall.
Realized 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.
Realized foreign currency gains, primarily resulting from the re-measurement of monetary account balances offset by the foreign currency hedges, were $3 million and unrealized foreign currency losses were $4 million for the fiscal year ended January 31, 2024.
For example, changes in exchange rates negatively affected our revenues as expressed in U.S. dollars for the fiscal year ended January 31, 2023.
For example, changes in exchange rates negatively affected our revenues as expressed in U.S. dollars for the fiscal year ended January 31, 2024. Additionally, changes in exchange rates had a largely offsetting impact on operating income for the fiscal year ended January 31, 2024.
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.
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.
Removed
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, we had realized foreign currency gains of $4 million and unrealized foreign currency losses of $4 million. Interest rate sensitivity We had cash, cash equivalents and short-term investments totaling $4.0 billion as of January 31, 2024.

Other VEEV 10-K year-over-year comparisons