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 October 31, 2024 increased $83 million, comprising an $86 million increase in subscription services revenues partially offset by a $3 million decrease in professional services and other revenues.

The increase in subscription services revenues consisted of $59 million of subscription services revenue attributable to R&D Solutions and $27 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 existing and new customers. The increase in subscription services revenue attributable to Commercial Solutions was primarily due to expanding use of our Veeva Commercial Cloud products by both existing and new customers and to a lesser extent due tohigher 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 October 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 October 31, 2023.

Professional services and other revenues for the three months ended October 31, 2024 decreased $3 million. The decrease in professional services revenue was primarily due toa decline in implementation services, partially offset by an increase in business consulting services. The geographic mix of professional services and other revenues was 62% from North America, 31% from Europe, and 7% from other locations, primarily Asia Pacific, for both the three months ended October 31, 2024 and 2023.

Total revenues for the nine months ended October 31, 2024 increased $293 million, comprising a $296 million increase in subscription services revenues partially offset by a $3 million decrease in professional services and other revenues.

The increase in subscription services revenues consisted of $218 million of subscription services revenue attributable to R&D Solutions and $78 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 existing and new customers. The increase in subscription services revenue attributable to Commercial Solutions was primarily due to expanding use of our Veeva Commercial Cloud products by both existing and new 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 nine months ended October 31, 2024, as compared to 58% from North America, 27% from Europe, and 15% from other locations, primarily Asia Pacific, for the nine months ended October 31, 2023.

Professional services and other revenues for the nine months ended October 31, 2024 decreased $3 million. The decrease in professional services revenue was primarily due to a decline in implementation services, partially offset by an increase in business consulting services. The geographic mix of professional services and other revenues was 60% from North America, 34% from Europe, and 6% from other locations, primarily Asia Pacific, for the nine months ended October 31, 2024, as compared to 62% from North America, 31% from Europe, and 7% from other locations, primarily Asia Pacific, for the nine months ended October 31, 2023.

Cost of Revenue and Gross Margin

Cost of revenues for the three months ended October 31, 2024 increased $7 million, comprising an $8 million increase in cost of subscription services, partially offset by a $1 million decrease in cost of professional services and other. The increase in cost of subscription services was primarily due to an increase of $6 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.

Cost of revenues for the nine months ended October 31, 2024 increased $15 million, comprising a $26 million increase in cost of subscription services, partially offset by an $11 million decrease in cost of professional services and other. The increase in cost of subscription services was primarily due to an increase of $17 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 decrease in cost of professional services and other was mainly due to a reduction in the use of third-party services in our implementation and deployment-related activities and employee compensation-related costs as headcount decreased.

We expect cost of subscription services to increase in absolute dollars in the near term due to increased usage of our subscription services.