VEEVA SYSTEMS INC (VEEV)

CIK: 0001393052. SIC: 7372 Services-Prepackaged Software. Latest 10-K as of: 2026-03-20.

SIC breadcrumb: Services > Business Services > SIC 7372 Services-Prepackaged Software

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1393052. Latest filing source: 0001393052-26-000014.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-20. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001393052.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-03-20. Report date: 2026-01-31.

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report. In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors. 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.”

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. 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 industry cloud solutions are grouped into four major product categories—Veeva Development Cloud, Veeva Quality Cloud, Veeva Commercial Cloud, and Veeva Data Cloud. For financial reporting purposes, “Commercial Solutions” revenues refer to revenues associated with our Veeva Commercial Cloud and Veeva Data Cloud solutions, and “R&D and Quality Solutions” revenues refer to revenues associated with our Veeva Development Cloud and Veeva Quality Cloud solutions.

In our fiscal year ended January 31, 2026, we derived approximately 47% and 53% of our subscription revenues and 45% and 55% of our total revenues from our Commercial Solutions and R&D and Quality Solutions, respectively. For the fiscal year ended January 31, 2025, we derived approximately 48% and 52% of our subscription revenues and 47% and 53% of our total revenues from our Commercial Solutions and R&D and Quality Solutions, respectively. Revenues associated with our R&D and Quality Solutions are expected to increase as a percentage of both subscription revenues and total revenues in the future. We also offer certain of our R&D and Quality Solutions to industries outside the life sciences industry primarily in North America and Europe.

For our fiscal years ended January 31, 2026, 2025, and 2024, our total revenues were $3,195 million, $2,747 million, and $2,364 million, respectively, representing year-over-year growth in total revenues of 16% in our fiscal year ended January 31, 2026, and 16% in our fiscal year ended January 31, 2025. For our fiscal years ended January 31, 2026, 2025, and 2024, our subscription revenues were $2,684 million, $2,285 million, and $1,902 million, respectively, representing year-over-year growth in subscription revenues of 17% in our fiscal year ended January 31, 2026, and 20% in our fiscal year ended January 31, 2025. We generated net income of $909 million, $714 million, and $526 million for our fiscal years ended January 31, 2026, 2025, and 2024, respectively.

As of January 31, 2026, 2025, and 2024, we served 1,552, 1,477, and 1,432 customers, respectively. As of January 31, 2026, 2025, and 2024, we had 767, 730, and 693 Commercial Solutions customers, respectively, and 1,196, 1,125, and 1,078 R&D and Quality Solutions customers, respectively. These customer count totals are net of customer attrition during each period. The combined customer counts for Commercial Solutions and R&D and Quality Solutions exceed the total customer count in each year because some customers subscribe to products in both areas. 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.

Components of Results of Operations

Revenues

We derive our revenues primarily from subscription fees and professional services fees. Subscription revenues consist of fees from customers accessing our software and data solutions. Professional services and other revenues consist primarily of fees from implementation services, configuration, and managed services in connection with our solutions, as well as services related to our speakers bureau logistics and Veeva Business Consulting

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offering. For the fiscal year ended January 31, 2026, subscription revenues constituted 84% of total revenues and professional services and other revenues constituted 16% of total revenues.

We generally enter into master subscription agreements with our customers and count each distinct master subscription agreement that has not been terminated or expired and that has orders for which we have recognized revenue in the quarter as a distinct customer for purposes of determining our total number of current customers as of the end of that quarter. We generally enter into a single master subscription agreement with each customer, although in some instances, affiliated legal entities within the same corporate family may enter into separate master subscription agreements. 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. Divisions, subsidiaries, and operating units of our customers often place distinct orders for our subscription services under the same master subscription agreement, and we do not count such distinct orders as new customers for purposes of determining our total customer count. 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 CRM applications generally have a one-year term. If a customer adds end users or additional Commercial Solutions to an existing order for a CRM application, such additional orders will generally be coterminous with the anniversary date of the 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.

Subscription revenues are generally recognized ratably over the respective noncancellable subscription term because of the continuous transfer of control to the customer. Our master subscription agreements governing multi-year orders generally include a termination for convenience right for our customers. The amount of revenue recognized from such orders will generally be consistent with the amount invoiced for the relevant term of the order.

Our subscription orders are generally billed at the beginning of the subscription period in annual or quarterly increments, which means the annualized value of such orders may not be completely reflected in deferred revenue at any single point in time. 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 have also agreed from time to time, and may agree in the future, to allow customers to change the renewal dates of their orders to, for example, align more closely with a customer’s annual budget process or to align with the renewal dates of other orders placed by other entities within the same corporate control group, or to change payment terms from annual to quarterly, or vice versa. 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. 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 or annual basis in deferred revenue, calculated billings, or normalized billings are precise indicators of future revenues. 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. We define the term normalized billings for any period to mean calculated billings adjusted for the impact of (i) term changes in our customer renewals, such as changes to renewal date (for example, changing the renewal date of multiple products to be coterminous) or changes to billing frequency (for example, changing from annual to quarterly billings), and (ii) delayed renewals that have closed and billed after the period end.

Our agreements typically provide that orders will automatically renew unless notice of non-renewal is provided in advance. Subscription 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. 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. Certain professional services and business consulting arrangements are billed on a fixed fee basis and revenues are typically recognized over time as the services are delivered based on time incurred. Professional services revenues are affected primarily by our customers’ demands for implementation services, configuration, managed services, and speakers bureau logistics. Our business consulting revenues are affected primarily by our customers’ demands

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for services related to a particular customer success initiative, strategic analysis, or business process change, and not by cloud software implementation.

Allocated Overhead

We accumulate certain costs such as office rent, utilities, and other facilities costs, information technology, and building depreciation, and allocate them across the various departments based on headcount. We refer to these costs as “allocated overhead.”

Cost of Revenues

Cost of subscription revenues for all of our solutions consists of expenses related to our computing infrastructure provided by third parties, including Amazon Web Services and Salesforce, Inc., 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.

Cost of professional services and other revenues consists primarily of employee-related expenses associated with providing professional and business consulting services. The cost of providing professional services is significantly higher as a percentage of the related revenues than the cost of subscription due to the direct labor costs and costs of third-party subcontractors.

Operating Expenses

Research and Development. Research and development expenses consist primarily of employee-related expenses, 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. Sales and marketing expenses consist primarily of employee-related expenses, sales commissions, marketing program costs, travel-related expenses, amortization expense associated with purchased intangibles primarily related to our customer relationships, and allocated overhead. Marketing program costs include advertising, customer events, corporate communications, brand awareness, and product marketing activities. Sales commissions are costs of obtaining new customer contracts and are capitalized and then amortized over a period of benefit that we have determined to be three years.

General and Administrative. General and administrative expenses consist of employee-related expenses for our finance and accounting, legal, employee success, management information systems personnel, and other administrative employees. 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, amortization of premiums paid or accretion of discounts on investments, and transaction gains or losses on foreign currency, net of hedging costs.

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 7 of the notes to our consolidated financial statements.

Recent Accounting Pronouncements

See note 1 of the notes to our consolidated financial statements in “Part II, Item 8. Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements.

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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,

2026

2025

(in thousands)

Consolidated Statements of Comprehensive Income Data:

Revenues:

Subscription

$

2,684,194 

$

2,284,659 

Professional services and other

511,117 

461,960 

Total revenues

3,195,311 

2,746,619 

Cost of revenues (1):

Cost of subscription

362,888 

323,070 

Cost of professional services and other

419,131 

376,566 

Total cost of revenues

782,019 

699,636 

Gross profit

2,413,292 

2,046,983 

Operating expenses (1):

Research and development

767,386 

693,078 

Sales and marketing

428,798 

396,726 

General and administrative

300,739 

265,744 

Total operating expenses

1,496,923 

1,355,548 

Operating income

916,369 

691,435 

Other income, net

278,139 

227,946 

Income before income taxes

1,194,508 

919,381 

Income tax provision

285,602 

205,243 

Net income

$

908,906 

$

714,138 

(1) Includes stock-based compensation as follows:

Cost of subscription

$

7,342 

$

6,591 

Cost of professional services and other

57,376 

51,377 

Research and development

204,893 

185,901 

Sales and marketing

97,355 

90,178 

General and administrative

105,737 

103,303 

Total stock-based compensation

$

472,703 

$

437,350 

Fiscal Year Ended January 31, 2026 and 2025

The following is a discussion of our results of operations for the year ended January 31, 2026 compared to the year ended January 31, 2025. For a discussion of our results of operations for the year ended January 31, 2025 compared to the year ended January 31, 2024, 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, 2025, which is hereby incorporated by reference.

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Revenues

Fiscal year ended January 31,

2026

2025

% Change

(dollars in thousands)

Revenues:

Subscription

$

2,684,194 

$

2,284,659 

17%

Professional services and other

511,117 

461,960 

11%

Total revenues

$

3,195,311 

$

2,746,619 

16%

Percentage of revenues:

Subscription

84 

%

83 

%

Professional services and other

16 

17 

Total revenues

100 

%

100 

%

Total revenues for the fiscal year ended January 31, 2026 increased $449 million, of which $400 million was from growth in subscription revenue.

The increase in subscription revenues consisted of $247 million attributable to R&D and Quality Solutions and $153 million attributable to Commercial Solutions. The increase in subscription revenue attributable to R&D and Quality Solutions was primarily driven by the expanding use by existing customers of our Veeva Development Cloud and Veeva Quality Cloud products and, to a lesser extent, due to higher prices in connection with our annual inflation adjustment for Veeva Development Cloud products. The increase in subscription revenue attributable to Commercial Solutions was primarily driven by the expanding use by existing customers of our Veeva Commercial Cloud and Veeva Data Cloud products and, to a lesser extent, due to higher prices in connection with our annual inflation adjustment for Veeva Commercial Cloud products. The geographic mix of subscription revenues was 60% from North America, 28% from Europe, and 12% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2026, as compared to 59% from North America, 28% from Europe, and 13% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2025.

Professional services and other revenues for the fiscal year ended January 31, 2026 increased $49 million. The increase was primarily due to an increase in business consulting and implementation services. The geographic mix of professional services and other revenues was 58% from North America, 36% from Europe, and 6% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2026, as compared to 60% from North America, 33% from Europe, and 7% from other locations, primarily Asia Pacific, for the fiscal year ended January 31, 2025.

Cost of Revenue and Gross Margin

Fiscal year ended January 31,

2026

2025

% Change

(dollars in thousands)

Cost of revenues:

Cost of subscription

$

362,888 

$

323,070 

12%

Cost of professional services and other

419,131 

376,566 

11%

Total cost of revenues

$

782,019 

$

699,636 

12%

Gross margin percentage:

Subscription

87 

%

86 

%

Professional services and other

18 

%

19 

%

Total gross margin percentage

76 

%

75 

%

Gross profit

$

2,413,292 

$

2,046,983 

18%

Cost of revenues for the fiscal year ended January 31, 2026 increased $82 million, comprised of a $42 million increase in cost of professional services and other and a $40 million increase in cost of subscription. The $42 million increase in cost of professional services and other was primarily related to employee compensation-related costs, which was driven by increases in salaries and benefits, as well as headcount. The increase in cost of subscription was primarily due to an increase of $36 million related to computing infrastructure and data costs. The increase in

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computing infrastructure costs 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 increase in data costs is related to our continued investment in our data solutions.

We expect cost of subscription to increase in absolute dollars in the future due to increased usage of our subscription services and continued investment in our data solutions. We expect cost of professional services and other to increase in absolute dollars in the future as we continue to invest in our services organization.

Operating Expenses and Operating Margin

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

Research and Development

Fiscal year ended January 31,

2026

2025

% Change

(dollars in thousands)

Research and development

$

767,386 

$

693,078 

11%

Percentage of total revenues

24 

%

25 

%

Research and development expenses for the fiscal year ended January 31, 2026 increased $74 million, primarily due to an increase of $64 million in employee compensation-related costs, which was driven by increases in salaries and benefits, as well as headcount. 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.

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

Sales and Marketing

Fiscal year ended January 31,

2026

2025

% Change

(dollars in thousands)

Sales and marketing

$

428,798 

$

396,726 

8%

Percentage of total revenues

13 

%

14 

%

Sales and marketing expenses for the fiscal year ended January 31, 2026 increased $32 million, primarily due to an increase of $29 million in employee compensation-related costs, which was driven by increases in salaries and benefits, as well as headcount. The expansion of our headcount was to support our sales and marketing efforts associated with our product offerings.

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

General and Administrative

Fiscal year ended January 31,

2026

2025

% Change

(dollars in thousands)

General and administrative

$

300,739 

$

265,744 

13%

Percentage of total revenues

9 

%

10 

%

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General and administrative expenses for the fiscal year ended January 31, 2026 increased $35 million, primarily due to a net increase of $26 million in litigation settlement-related charges.

We expect general and administrative expenses to decrease in the next fiscal year, due to the litigation settlement-related charges discussed above.

Other Income, Net

Fiscal year ended January 31,

2026

2025

% Change

(dollars in thousands)

Other income, net

$

278,139 

$

227,946 

22%

Other income, net, for the fiscal year ended January 31, 2026 increased $50 million, primarily due to an increase in interest income from higher investment asset and cash balances.

Provision for Income Taxes

Fiscal year ended January 31,

2026

2025

% Change

(dollars in thousands)

Income before income taxes

$

1,194,508 

$

919,381 

30%

Income tax provision

$

285,602 

$

205,243 

39%

Effective tax rate

23.9 

%

22.3 

%

The provision for income taxes differs from the tax computed at the U.S. federal statutory income tax rate primarily due to state taxes, equity compensation, tax credits, and foreign-derived intangible income (“FDII”) deduction. 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, 2026, as compared to the prior fiscal year, our effective tax rate increased primarily due to the indirect effects of the One Big Beautiful Bill Act (“OBBBA”), offset by increased excess tax benefits related to equity compensation. In addition, the OBBBA restored the immediate expensing of certain domestic R&D expenditures and included an election to accelerate the unamortized capitalized R&D over a two-year period, which decreased our taxable income resulting in a decrease in our FDII benefit.

Non-GAAP Financial Measures

In our public disclosures, we have provided non-GAAP measures, which we define as financial information that has not been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. In addition to our GAAP measures, we use these non-GAAP financial measures internally for budgeting and resource allocation purposes and in analyzing our financial results.

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. Excess tax benefits from employee stock plans are dependent on previously agreed-upon equity grants to our employees, vesting of those grants, stock price, and exercise behavior of our employees, which can fluctuate from quarter to quarter. Because these fluctuations are not directly related to our business operations, we find it useful to exclude excess tax benefits when assessing the level of cash provided by operating activities. Given the nature of the excess tax benefits, we believe excluding it allows investors to make meaningful comparisons between our operating cash flows from quarter to quarter and those of other companies.

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•Stock-based compensation expenses. We exclude stock-based compensation expenses primarily because they are non-cash expenses that we exclude from our internal management reporting processes. We also find it useful to exclude these expenses when we assess the appropriate level of various operating expenses and resource allocations when budgeting, planning, and forecasting future periods. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use, we believe excluding stock-based compensation expenses allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies.

•Amortization of purchased intangibles. We incur amortization expense for purchased intangible assets in connection with acquisitions of certain businesses and technologies. Amortization of intangible assets is a non-cash expense and is inconsistent in amount and frequency because it is significantly affected by the timing, size of acquisitions, and the inherent subjective nature of purchase price allocations. Because these costs have already been incurred and cannot be recovered, and are non-cash expenses, we exclude these expenses for internal management reporting processes. We also find it useful to exclude these charges when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning, and forecasting future periods. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well.

•Litigation settlement-related charges. We exclude certain costs related to litigation settlements, including outcome-based payments to the law firms that represented us, because they are non-recurring and outside the ordinary course of business. Because these costs are unrelated to our day-to-day business operations, we believe excluding them enables more consistent evaluation of our operating results.

•Income tax effects on the difference between GAAP and non-GAAP costs and expenses. The income tax effects that are excluded relate to the imputed tax impact on the difference between GAAP and non-GAAP costs and expenses due to stock-based compensation and purchased intangibles for GAAP and non-GAAP measures.

Limitations on the Use of Non-GAAP Financial Measures

There are limitations to using non-GAAP financial measures because non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures provided by other companies.

The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact upon our reported financial results. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which items are adjusted to calculate our non-GAAP financial measures. We compensate for these limitations by analyzing current and future results on a GAAP basis as well as a non-GAAP basis and also by providing GAAP measures in our public disclosures.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. We 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.

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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,

2026

2025

(in thousands)

Net cash provided by operating activities on a GAAP basis

$

1,415,225 

$

1,090,051 

Excess tax benefits from employee stock plans

(25,273)

(8,932)

Net cash provided by operating activities on a non-GAAP basis

$

1,389,952 

$

1,081,119 

Net cash used in investing activities on a GAAP basis

$

(1,104,362)

$

(700,138)

Net cash (used in) provided by financing activities on a GAAP basis

$

(9,333)

$

26,115 

Operating income on a GAAP basis

$

916,369 

$

691,435 

Stock-based compensation expense

472,703 

437,350 

Amortization of purchased intangibles

14,146 

18,558 

Litigation settlement-related charges

30,627 

5,000 

Operating income on a non-GAAP basis

$

1,433,845 

$

1,152,343 

Net income on a GAAP basis

$

908,906 

$

714,138 

Stock-based compensation expense

472,703 

437,350 

Amortization of purchased intangibles

14,146 

18,558 

Litigation settlement-related charges

30,627 

5,000 

Income tax effect on non-GAAP adjustments (1)

(73,915)

(84,618)

Net income on a non-GAAP basis

$

1,352,468 

$

1,090,428 

Diluted net income per share on a GAAP basis

$

5.44 

$

4.32 

Stock-based compensation expense

2.83 

2.65 

Amortization of purchased intangibles

0.08 

0.11 

Litigation settlement-related charges

0.18 

0.03 

Income tax effect on non-GAAP adjustments (1)

(0.43)

(0.51)

Diluted net income per share on a non-GAAP basis

$

8.10 

$

6.60 

(1) For the fiscal years ended January 31, 2026 and 2025, we used an estimated annual effective non-GAAP tax rate of 21%.

Liquidity and Capital Resources

Fiscal year ended January 31,

2026

2025

2024

(in thousands)

Net cash provided by operating activities

$

1,415,225 

$

1,090,051 

$

911,339 

Net cash used in investing activities

(1,104,362)

(700,138)

(1,076,351)

Net cash (used in) provided by financing activities

(9,333)

26,115 

(16,188)

Effect of exchange rate changes on cash and cash equivalents

919 

(1,735)

(1,780)

Net change in cash and cash equivalents

$

302,449 

$

414,293 

$

(182,980)

Our principal sources of liquidity continue to be comprised of our existing cash, cash equivalents, and short-term investments. As of January 31, 2026, our cash, cash equivalents, and short-term investments totaled $6.6 billion, of which $86 million represented cash and cash equivalents held outside of the United States.

Our primary use of cash is payment of our operating costs, which consist primarily of employee-related expenses, such as compensation and benefits, investments in our information technology infrastructure, and general operating expenses for marketing, facilities, and overhead costs. Long-term cash requirements for items other than normal operating expenses could include the following: the acquisition of businesses, or technologies complementary to our business, share repurchases, 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. As of January 31, 2026, we have not recorded any taxes, such as withholding taxes, associated with the foreign earnings that are indefinitely reinvested outside of the United States. Under currently enacted tax laws, if we were to choose to repatriate the funds we have designated as indefinitely

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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. We believe our existing cash, cash equivalents, and short-term investments will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months. Our future capital requirements will depend on many factors including our growth rate, subscription renewal activity, the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the ongoing investments in technology infrastructure, the introduction of new and enhanced solutions, and the continuing market acceptance of our solutions. In addition to share repurchase activity, we may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies, and intellectual property rights. We may be required to seek additional equity or debt financing for those arrangements or for other reasons.

Share Repurchase Program

In January 2026, our board of directors authorized a share repurchase program of up to $2 billion of our outstanding shares of common stock. Under the program, we may repurchase shares of common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, in accordance with applicable securities laws and other restrictions, including Rule 10b-18 under the Exchange Act. The timing and total amount of any share repurchases depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The share repurchase program has a term of two years, may be suspended or discontinued at any time, and does not obligate us to acquire any amount of common stock. Any repurchased shares of common stock will be retired. The repurchase program will be funded using our working capital.

During the fiscal year ended January 31, 2026, we repurchased and subsequently retired 801,735 shares of our common stock for an aggregate amount of approximately $180 million.

Fiscal Year Ended January 31, 2026 and 2025

The following is a discussion of our cash flows for the year ended January 31, 2026 compared to the year ended January 31, 2025. For a discussion of our cash flows for the year ended January 31, 2025 compared to the year ended January 31, 2024, 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, 2025, which is hereby incorporated by reference.

Cash Flows from Operating Activities

Our largest source of operating cash inflows is cash collections from our customers for subscription services. We also generate significant cash flows from our professional services arrangements. The first quarter of our fiscal year is seasonally the strongest quarter for cash inflows due to the collections from our annual subscription billings. As a result, we expect cash flows from operating activities to be substantially less in each of the subsequent quarters of the fiscal year. 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), building infrastructure costs (including leases for office space), and fees for third-party legal counsel and accounting services.

Net cash provided by operating activities was $1,415 million for the fiscal year ended January 31, 2026 compared to $1,090 million provided by operating activities for the fiscal year ended January 31, 2025. The increase in cash provided by operating activities was primarily due to increased sales and the related cash collections and the impact of the OBBBA, partially offset by increased expenses.

The OBBBA restored the option to deduct certain domestic research and development expenditures, which were previously required to be capitalized and amortized over five years under the Tax Cuts and Jobs Act of 2017. Additionally, the OBBBA provides for an election to accelerate the deduction of unamortized capitalized domestic research and development expenditures from fiscal years ended January 31, 2023 to January 31, 2025. The OBBBA is expected to increase our cash flows from operating activities in future periods, the amounts of which we are unable to estimate at this time.

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Cash Flows from Investing Activities

Investing activities primarily relate to cash used for the purchase of marketable securities, net of maturities, as well as capital expenditures.

Net cash used in investing activities was $1,104 million for the fiscal year ended January 31, 2026 compared to $700 million used in investing activities for the fiscal year ended January 31, 2025. The increase in cash used in investing activities was primarily due to the increase in purchases of short-term investments.

Cash Flows from Financing Activities

The cash flows from financing activities relate primarily to share repurchases and taxes paid on behalf of employees related to the net share settlement of restricted stock units (“RSUs”), offset by stock option exercises.

Net cash used in financing activities was $9 million for the fiscal year ended January 31, 2026 compared to $26 million provided by financing activities for the fiscal year ended January 31, 2025. The change in cash used in financing activities was primarily due to share repurchases, offset by an increase in proceeds from employee stock option exercises.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). In the preparation of these consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

We believe that of our significant accounting policies, which are described in note 1 of the notes to the consolidated financial statements, the following accounting policies involve a greater degree of judgment and complexity. 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. The transaction price is allocated to the distinct performance obligations on a relative standalone selling price basis. Significant judgment is sometimes required in developing an estimate of the standalone selling price for each distinct performance obligation based on our overall pricing objectives, market conditions, and other factors, including other groupings such as customer type and geography. The standalone selling prices of our distinct performance obligations are reviewed on a periodic basis or when there are significant changes in facts and circumstances. Our pricing objectives, market conditions, or other factors may change in the future, resulting in changes to standalone selling prices that could impact the timing or amount of revenue recognition.

Business Combinations and Valuation of Acquired Intangible Assets

We allocate the purchase price of acquired companies to tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. The purchase price allocation process requires management to make significant estimates and assumptions with respect to the valuation of intangible assets. Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to future expected cash flows, future revenue growth, margins, customer retention rates, technology life, royalty rates, expected use of acquired assets, and discount rates. These factors are also considered in determining the useful life of the acquired intangible assets. These estimates are based in part on historical experience, market conditions, and information obtained from management of the acquired companies and are inherently uncertain. Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recorded.

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