Key Points
- Revenue of $126.7 million exceeded management's expectations.
- Adjusted EBITDA of $65.9 million was significantly above guidance.
- Annual guidance for revenue and adjusted EBITDA ranges increased.
Doximity (DOCS -1.10%), a leading digital platform for U.S. medical professionals, posted impressive results for its fiscal 2025's first quarter on Aug. 8. Revenue for the quarter hit $126.7 million, outperforming management’s guidance of $119.5-$120.5 million. Adjusted EBITDA also exceeded expectations, reaching $65.9 million against a projected range of $55-$56 million. The company showed robust year-over-year growth and improved profitability, despite some areas of concern like reduced cash flow.
Understanding Doximity
| Metric | Current Period | Management's Expectations | Prior Year Period | YoY Change |
|---|---|---|---|---|
| Revenue (in millions) | $126.7 | $119.5 - $120.5 | $108.5 | 16.8% |
| Adjusted EBITDA (in millions) | $65.9 | $55 - $56 | $46.6 | 41.4% |
| Net Income (in millions) | $41.4 | N/A | $28.4 | 45.8% |
| Diluted earnings per share | $0.21 | N/A | $0.13 | 61.5% |
| Source: Expectations based on management's guidance, as provided in May 16, 2024 earnings report. |
Doximity is a prominent digital platform catering to U.S. medical professionals, boasting over two million registered members. This includes more than 80% of U.S. physicians, 60% of nurse practitioners and physician assistants, and 90% of graduating medical students. The platform offers a comprehensive suite of tools that enhance productivity, such as telehealth and messaging services, and AI-powered workflow tools.
Recently, Doximity has focused on increasing user engagement and expanding its offerings. It leverages AI to provide personalized experiences and aims to enhance its diverse product suite to cater to the evolving needs of healthcare professionals and clients.
Quarterly Highlights
Doximity reported revenue of $126.7 million for the quarter, a 17% increase from $108.5 million in the same period last year. The company's net income grew to $41.4 million, up 46% from $28.4 million in the prior year. The non-GAAP net income also rose 37.7%, from $40.6 million to $55.9 million, with margins improving to 44.1% from 37.5%.
Gross profit climbed from $95.3 million to $113.1 million, with gross margins reaching 89.3%, up from 87.9%. Non-GAAP gross profit was $116 million, with a margin of 91.6%, reflecting efficient cost management. Diluted EPS saw a boost from $0.13 to $0.21, while non-GAAP EPS rose from $0.19 to $0.28.
Operating cash flow saw a decline of 28%, dropping from $57.2 million to $41.2 million. Likewise, free cash flow decreased by 29%, from $55.6 million to $39.5 million. This reduction suggests possible increased operational expenses or investments, an area warranting attention despite strong revenue growth.
Doximity continues to expand its user base, with 590,000 unique providers using its AI, telehealth, messaging, and workflow tools during the quarter. This growth in active users signals enhanced adoption and engagement, a crucial factor for the platform's sustained success. The company also maintains a comprehensive suite of solutions for marketing, hiring, and productivity, thereby diversifying its revenue streams.
In terms of data and AI capabilities, Doximity's integration of AI for personalized and efficient platform experiences remains a cornerstone of its strategy. This not only boosts user engagement but also helps Doximity stay competitive in the healthcare tech industry. The company's trusted and physician-first approach, emphasizing HIPAA-compliant and verified interactions, ensures continuous user trust and engagement.
Looking Ahead
For the full fiscal year of 2025, Doximity has updated its revenue guidance to a range of $514 million to $523 million, up from the previous $506 million to $518 million. Adjusted EBITDA guidance has also been raised, now expected to be between $248.5 million and $257.5 million, reflecting management's confidence in continued growth and operational performance.
Investors should watch for how Doximity manages its investments, especially regarding AI advancements and operational expenses. The company's ability to sustain its high user engagement and adoption rates will be critical. Competitive pressures in the broader health tech market are another area for monitoring, along with any changes in healthcare policies that could impact the company’s services and profitability.
