VEEVA SYSTEMS INC

Results of Operations

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

Revenues

Total revenues for the three months ended July 31, 2024 increased $86 million, comprising a $91 million increase in subscription services revenues partially offset by a $5 million decrease in professional services and other revenues.

The increase in subscription services revenues consisted of $62 million of subscription services revenue attributable to R&D Solutions and $28 million of subscription services revenue attributable to Commercial Solutions. Theincrease in subscription services revenue attributable to R&D Solutions was primarily due to expanding use of Veeva Development Cloud products by both new and existing customers. The increase in subscription services revenue attributable to Commercial Solutions was primarily due to expanding use of our Veeva Commercial Cloud and Veeva Data Cloud products by both new and existing customers and to a lesser extent due to higher prices in connection with our annual inflation adjustment. The geographic mix of subscription services revenues was 59% from North America, 28% from Europe, and 13% from other locations, primarily Asia Pacific, for the three months ended July 31, 2024, as compared to 58% from North America, 27% from Europe, and 15% from other locations, primarily Asia Pacific, for the three months ended July 31, 2023.

Professional services and other revenues for the three months ended July 31, 2024 decreased $5 million. The decrease in professional services revenue was primarilydue to a decline in implementation and deployment-related services, partially offset by an increase in business consulting services. The geographic mix of professional services and other revenues was 57% from North America, 36% from Europe, and 7% from other locations, primarily Asia Pacific, for the three months ended July 31, 2024, as compared to 62% from North America, 30% from Europe, and 8% from other locations, primarily Asia Pacific, for the three months ended July 31, 2023.

Total revenues for the six months ended July 31, 2024 increased $210 million, all of which was driven by growth in subscription services revenues.

The increase in subscription services revenues consisted of $160 million of subscription services revenue attributable to R&D Solutions and $50 million of subscription services revenue attributable to Commercial Solutions. The increase in subscription services revenue attributable to R&D solutions was primarily due to expanding use of Veeva Development Cloud products by both new and existing customers. The increase in subscription services revenue attributable to Commercial Solutions was primarily due to expanding use of our Veeva Commercial Cloud and Veeva Data Cloud products by both new and existing customers and to a lesser extent due to higher prices in connection with our annual inflation adjustment. The geographic mix of subscription services revenues was 59% from North America, 28% from Europe, and 13% from other locations, primarily Asia Pacific, for the six months ended July 31, 2024, as compared to 58% from North America, 27% from Europe, and 15% from other locations, primarily Asia Pacific, for the six months ended July 31, 2023.

Professional services and other revenues for the six months ended July 31, 2024 remained relatively consistent as a decline in implementation and deployment-related services during the period was offset by an increase in business consulting services. The geographic mix of professional services and other revenues was 58% from North America, 35% from Europe, and 7% from other locations, primarily Asia Pacific, for the six months ended July 31, 2024, as compared to 62% from North America, 30% from Europe, and 8% from other locations, primarily Asia Pacific, for the six months ended July 31, 2023.

Cost of Revenue and Gross Margin

Cost of revenues for the three months ended July 31, 2024 increased $1 million, comprising a $7 million increase related to an increase in cost of subscription services, partially offset by a $6 million decrease in cost of professional services and other. The increase in cost of subscription services was primarily due to an increase of $4 million related to computing infrastructure costs, which was driven by an increase in both the number of end users and the volume of activity by end users of our subscription services. The $6 million decrease in cost of professional services and other was mainly due to a reduction in employee compensation-related costs as headcount decreased.

Cost of revenues for the six months ended July 31, 2024 increased $9 million, comprising an $18 million increase related to an increase in cost of subscription services, partially offset by a $9 million decrease in cost of professional services and other. The increase in cost of subscription services was primarily due to an increase of $10 million related to computing infrastructure costs, which was driven by an increase in both the number of end users and the volume of activity by end users of our subscription services. The $9 million decrease in cost of professional services and other was mainly due to a reduction in employee compensation-related costs as headcount decreased and the use of third-party services in our implementation and deployment-related activities.

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.