VEEVA SYSTEMS INC

Operating expenses include research and development, sales and marketing, and general and administrative expenses. We expect operating expenses to increase in the near term, primarily due to employee compensation-related costs.

Research and Development

Research and development expenses for the fiscal year ended January 31, 2025 increased $64 million due to an increase of $46 million in employee compensation-related costs and an increase of $16 million in technology and infrastructure costs. The increase in employee compensation-related costs was primarily driven by an increase in headcount and the increase in technology and infrastructure costs was primarily driven by higher hosting fees. The expansion of our headcount in research and development and the increased technology and infrastructure costs were to support development work for the products that we offer or may offer in the future.

We expect research and development expenses to increase in the near term, primarily due to employee compensation-related costs and hosting fees as we continue to invest in our product offerings.

Sales and Marketing

Sales and marketing expenses for the fiscal year ended January 31, 2025 increased $15 million, primarily due to an increase of $6 million in employee compensation-related costs and an increase of $4 million in travel costs. 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.

We expect sales and marketing expenses to increase in the near term, primarily due to employee compensation-related costs and the increase in marketing program costs related to events.

General and Administrative

General and administrative expenses for the fiscal year ended January 31, 2025 increased $19 million, primarily due to an increase of $34 million in employee compensation-related costs, partially offset by a reduction of $10 million in legal fees. The increase in employee compensation-related costs was primarily driven by stock-based compensation related to the equity grant to our Chief Executive Officer in June 2024.

We expect an increase in general and administrative expenses in the near term, primarily related to the stock-based compensation associated with the equity grant to our Chief Executive Officer discussed above.

Other Income, Net

Other income, net, for the fiscal year ended January 31, 2025 increased $69 million due to an increase in interest income from higher investment asset balances and higher yields from investments.

Foreign Currency

We experience foreign currency fluctuations due to the periodic re-measurement of balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. The results of operations and cash flows are also subject to fluctuations in foreign currency exchange rates, particularly in the Euro, Japanese Yen, Canadian Dollar, Great British Pound Sterling, and Chinese Yuan.

Provision for Income Taxes

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. Future tax rates could be affected by changes in tax laws and regulations or by rulings in tax related litigation, as may be applicable.

During the fiscal year ended January 31, 2025, as compared to the prior fiscal year, our effective tax rate increased primarily due to the reduced excess tax benefits related to equity compensation. The decrease in excess tax benefits during the fiscal year ended January 31, 2025 was primarily due to stock option exercises by our Chief Executive Officer in the prior year and none in the current year.