VEEVA SYSTEMS INCVEEV
VEEVA SYSTEMS INC Income Taxes Disclosure
Income Taxes
The components of income before income taxes by U.S. and foreign jurisdictions were as follows for the periods shown (in thousands):
| Fiscal year ended January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| United States | $ | 1,140,527 | $ | 890,066 | $ | 546,837 | |||||||||||
| Foreign | 53,981 | 29,315 | 41,186 | ||||||||||||||
| Total | $ | 1,194,508 | $ | 919,381 | $ | 588,023 | |||||||||||
The majority of our revenues from international sales are invoiced from and collected by our U.S. entity and recognized as a component of income before taxes in the United States as opposed to a foreign jurisdiction.
Provision for income taxes consisted of the following for the periods shown (in thousands):
| Fiscal year ended January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Current provision: | |||||||||||||||||
| Federal | $ | 160,443 | $ | 243,660 | $ | 126,174 | |||||||||||
| State | 44,196 | 62,953 | 29,361 | ||||||||||||||
| Foreign | 15,869 | 10,903 | 12,157 | ||||||||||||||
| Total current provision | 220,508 | 317,516 | $ | 167,692 | |||||||||||||
| Deferred provision (benefit) | |||||||||||||||||
| Federal | 60,512 | (90,035) | (87,651) | ||||||||||||||
| State | 8,129 | (18,569) | (15,739) | ||||||||||||||
| Foreign | (3,547) | (3,669) | (1,984) | ||||||||||||||
| Total deferred provision (benefit) | 65,094 | (112,273) | $ | (105,374) | |||||||||||||
| Income tax provision | $ | 285,602 | $ | 205,243 | $ | 62,318 | |||||||||||
Provision for income taxes differed from the amount computed by applying the federal statutory income tax rate of 21% for the fiscal year ended January 31, 2026 to income before income taxes as a result of the following, prepared in accordance with ASU 2023-09 (in thousands, except percentages):
| Fiscal year ended January 31, | |||||||||||
| 2026 | |||||||||||
| Federal tax statutory tax rate | $ | 250,845 | 21.0 | % | |||||||
State and local income taxes, net of federal income tax effect (1) | 41,337 | 3.5 | % | ||||||||
| Foreign tax effects | 1,505 | 0.1 | % | ||||||||
| Effect of cross-border tax laws | |||||||||||
| Foreign derived intangible income deduction ("FDII") | (13,105) | (1.1) | % | ||||||||
| Other | 810 | 0.1 | % | ||||||||
| Tax credits | |||||||||||
| R&D credits | (22,745) | (1.9) | % | ||||||||
| Other credits | (639) | (0.1) | % | ||||||||
| Valuation allowance | (655) | (0.1) | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Nondeductible stock-based compensation | 32,137 | 2.7 | % | ||||||||
| Excess tax benefits on stock-based compensation | (16,604) | (1.4) | % | ||||||||
| 162(m) limited executive compensation | 14,510 | 1.2 | % | ||||||||
| Other | 306 | — | % | ||||||||
| Changes in unrecognized tax benefits | (1,657) | (0.1) | % | ||||||||
| Other adjustments | (443) | — | % | ||||||||
| Income tax provision | $ | 285,602 | 23.9 | % | |||||||
(1) In the fiscal year ended January 31, 2026, state and local income taxes in New Jersey, Pennsylvania, and Massachusetts comprise the majority of the domestic state and local income taxes, net of federal effect category. | |||||||||||
The following table presents the required disclosures prior to our adoption of ASU 2023-09. Provision for income taxes differed from the amount computed by applying the federal statutory income tax rate of 21% for each of the fiscal years ended January 31, 2025 and 2024 to income before income taxes as a result of the following (in thousands):
| Fiscal year ended January 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
Expected provision at statutory tax rate | $ | 193,070 | $ | 123,485 | ||||||||||
State taxes, net of federal benefit | 42,650 | 12,056 | ||||||||||||
| Tax credits | (35,416) | (36,333) | ||||||||||||
| Stock-based compensation | 35,618 | (32,054) | ||||||||||||
| Valuation allowance | 3,726 | 13,572 | ||||||||||||
Foreign derived intangible income deduction (“FDII”) | (30,535) | (15,489) | ||||||||||||
Release of income tax reserves | (2,531) | (9,201) | ||||||||||||
Other | (1,339) | 6,282 | ||||||||||||
| Income tax provision | $ | 205,243 | $ | 62,318 | ||||||||||
The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and liabilities related to the following (in thousands):
| January 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Capitalized expenditures | $ | 246,020 | $ | 326,533 | |||||||
| Stock-based compensation | 82,657 | 68,466 | |||||||||
| Tax credit carryforward | 67,067 | 64,536 | |||||||||
| Lease liabilities | 25,216 | 19,737 | |||||||||
| Other | 14,170 | 14,781 | |||||||||
| Gross deferred tax assets | 435,130 | 494,053 | |||||||||
| Valuation allowance | (79,495) | (77,056) | |||||||||
| Total deferred tax assets | 355,635 | 416,997 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Intangible assets | (21,945) | (23,305) | |||||||||
| Lease right-of-use assets | (19,988) | (16,675) | |||||||||
| Other | (40,843) | (33,685) | |||||||||
| Total deferred tax liabilities | (82,776) | (73,665) | |||||||||
| Net deferred tax assets | $ | 272,859 | $ | 343,332 | |||||||
In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including recent financial performance, scheduled reversals of temporary differences and projected future taxable income. Based on a review of such information, management believes that it is possible that some portion of deferred tax assets will not be realized as a future benefit and therefore has recorded a valuation allowance. The valuation allowance at the end of January 31, 2026 was primarily related to certain U.S. state deferred tax assets.
As of January 31, 2026, the net operating loss carryforwards for state income tax purposes were approximately $13 million. The state net operating losses begin to expire in 2031.
As of January 31, 2026, we had $82 million of California research and development tax credits available to offset future taxes which do not expire.
We evaluate tax positions for recognition using a more likely than not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. We classify unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as “other non-current liabilities” in the consolidated balance sheets. As of January 31, 2026, the total amount of gross unrecognized tax benefits was $42 million, of which $26 million, if recognized, would favorably impact our effective tax rate. The aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows for the periods shown (in thousands):
| Fiscal year ended January 31, | |||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||
| Beginning balance | $ | 39,402 | $ | 39,737 | $ | 30,713 | |||||||||||
| Increases related to tax positions taken during the prior period | 584 | 2 | 7,385 | ||||||||||||||
| Increases related to tax positions taken during the current period | 4,641 | 4,242 | 10,131 | ||||||||||||||
| Decreases related to tax positions taken during the prior period | (29) | (101) | (17) | ||||||||||||||
| Lapse of statute of limitations | (3,051) | (4,478) | (8,475) | ||||||||||||||
| Ending balance | $ | 41,547 | $ | 39,402 | $ | 39,737 | |||||||||||
Our policy is to classify interest and penalties associated with unrecognized tax benefits as a component of the provision for income taxes. Accrued interest and penalties included in our liability related to unrecognized tax benefits were $4 million, $3 million, and $2 million as of January 31, 2026, 2025, and 2024, respectively.
We file tax returns in the United States for federal, California, and other states. Fiscal years ended January 31, 2023 and forward remain open to examination for federal income tax, and fiscal years ended January 31, 2018 and forward remain open to examination for California and other states. We file tax returns in multiple foreign
jurisdictions. The fiscal years ended January 31, 2021 and forward remain open to examination in these foreign jurisdictions.
Net cash paid for income taxes, net of refunds, consisted of the following, prepared in accordance with ASU 2023-09 (in thousands):
| Fiscal year ended January 31, | |||||
| 2026 | |||||
| Federal | $ | 159,500 | |||
| State and local | |||||
| New Jersey | 15,231 | ||||
| Pennsylvania | 11,701 | ||||
| Other states and localities | 27,681 | ||||
| Foreign | 15,852 | ||||
| Net cash paid for income taxes | $ | 229,965 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 20, 2026 | Showing above |
| 2025 | Mar 24, 2025 | |
| 2024 | Mar 25, 2024 | |
| 2023 | Mar 30, 2023 | |
| 2022 | Mar 30, 2022 | |
| 2021 | Mar 30, 2021 | |
| 2020 | Mar 30, 2020 | |
| 2019 | Mar 28, 2019 | |
| 2018 | Mar 30, 2018 | |
| 2017 | Mar 30, 2017 | |
| 2016 | Mar 31, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.