Doximity Announces Fourth Quarter and Fiscal Year 2023 Financial Results and New Senior Leadership Hires

Q4 total revenues of $111.0 million, up 18% year-over-year
Q4 net income margin of 28% and adjusted EBITDA margin of 44%

Fiscal year 2023 total revenues of $419.1 million, up 22% year-over-year
Fiscal year 2023 net income margin of 27% and adjusted EBITDA margin of 44%

SAN FRANCISCO--(BUSINESS WIRE)--Doximity, Inc. (NYSE: DOCS), the leading digital platform for U.S. medical professionals, today announced results of its fiscal 2023 fourth quarter and fiscal year ended March 31, 2023. The company also announced the appointment of two new senior leadership members, Craig Overpeck as SVP of commercial operations and Ben Greenberg as SVP of commercial products.

“With the public health emergency officially over, we’re proud to emerge with a record number of providers using our physician cloud in Q4 to power their scheduling, fax, e-signature, and telehealth needs,” said Jeff Tangney, co-founder and CEO at Doximity. “We’re also thrilled to welcome Craig Overpeck and Ben Greenberg to our senior leadership team, as we continue to grow and scale our commercial businesses.”

Mr. Overpeck joins Doximity with over 25 years of experience delivering digital solutions to serve and connect physicians. He served as the U.S. chief operating officer at M3 for over a decade, and spent more than 16 years as co-founder and chief technology officer at MDLinx.

Mr. Greenberg also joins Doximity with decades of experience building digital products. Most notably, he spent more than 11 years at WebMD / Medscape, where he served as vice president of mobile products and user experience.

Fiscal 2023 Fourth Quarter Financial Highlights

All comparisons, unless otherwise noted, are to the three months ended March 31, 2022.

• Revenue: Revenue of $111.0 million, versus $93.7 million, an increase of 18% year-over-year.

• Net income and non-GAAP net income: Net income of $30.7 million, versus $36.7 million, representing a margin of 27.6%, versus 39.2%. Non-GAAP net income of $42.1 million, versus $44.9 million, representing a margin of 38.0%, versus 47.9%.

• Adjusted EBITDA: Adjusted EBITDA of $48.9 million, versus $39.4 million, an increase of 24% year-over-year, representing adjusted EBITDA margins of 44.1%, versus 42.0%.

• Net income per share and non-GAAP net income per share: Diluted net income per share was $0.14, versus $0.17, while non-GAAP diluted net income per share was $0.20, versus $0.21.

• Operating cash flow and free cash flow: Operating cash flow of $46.6 million, versus $47.0 million, a decrease of 1% year-over-year, and free cash flow of $45.6 million, versus $44.9 million, an increase of 2% year-over-year.

Fiscal Year 2023 Financial Highlights

All comparisons, unless otherwise noted, are to the fiscal year ended March 31, 2022.

• Revenue: Revenue of $419.1 million, versus $343.5 million, an increase of 22% year-over-year.

• Net income and non-GAAP net income: Net income of $112.8 million, versus $154.8 million, representing a margin of 26.9%, versus 45.1%. Non-GAAP net income of $154.9 million, versus $180.6 million, representing a margin of 37.0%, versus 52.6%.

• Adjusted EBITDA: Adjusted EBITDA of $184.0 million, versus $150.3 million, an increase of 22% year-over-year, representing adjusted EBITDA margins of 43.9%, versus 43.7%.

• Net income per share and non-GAAP net income per share: Diluted net income per share was $0.53, versus $0.70, while non-GAAP diluted net income per share was $0.73, versus $0.82.

• Operating cash flow and free cash flow: Operating cash flow of $179.6 million, versus $126.6 million, an increase of 42% year-over-year, and free cash flow of $173.4 million, versus $120.9 million, an increase of 43% year-over-year.

Financial Outlook

Doximity is providing guidance for its fiscal first quarter ending June 30, 2023 as follows:

• Revenue between $106.5 million and $107.5 million.

• Adjusted EBITDA between $39.0 million and $40.0 million.

Doximity is providing guidance for its fiscal year ending March 31, 2024 as follows:

• Revenue between $500 million and $506 million.

• Adjusted EBITDA between $216 million and $222 million.

Conference Call Information

Doximity will host a webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss these financial results. To listen to a live audio webcast, please visit the Company’s Investor Relations page at https://investors.doximity.com. The archived webcast will be available on the Company’s Investor Relations page shortly after the call.

About Doximity

Founded in 2010, Doximity is the leading digital platform for U.S. medical professionals. The Company's network members include over 80% of U.S. physicians across all specialties and practice areas. Doximity provides its verified clinical membership with digital tools built for medicine, enabling them to collaborate with colleagues, stay up to date with the latest medical news and research, manage their careers and on-call schedules, and conduct virtual patient visits. Doximity's mission is to help doctors be more productive so they can provide better care for their patients. For more information, visit www.doximity.com.

Forward-Looking Statements

Statements we make in this press release may include statements which are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are making this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations, or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including (i) the timing and scope of anticipated stock repurchases; (ii) the impact of uncertainty in the current economic environment and macroeconomic uncertainty, including the resurgence or resolution of the COVID-19 pandemic or other pandemics, epidemics or infectious diseases; (iii) our ability to retain existing members or add new members to our platform and maintain or grow their engagement with our platform; (iv) our ability to attract new customers or retain existing customers; (v) the impact of our prioritization of our members’ interests; (vi) breaches in our security measures or unauthorized access to members’ data; (vii) our ability to maintain or manage our growth, and other risks and factors that are beyond our control including, without limitation, those set forth in the section entitled “Risk Factors” in the Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2022. Additional information will be provided in our Annual Report on Form 10-K for the annual period ended March 31, 2023. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements. The forward-looking statements made in this press release relate only to management’s beliefs and assumptions as of this date. We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

DOXIMITY, INC. CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)
	March 31, 2023			March 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	158,027		$	112,809
Marketable securities		682,972			685,304
Accounts receivable, net		107,047			81,073
Prepaid expenses and other current assets		22,289			19,439
Deferred contract costs, current		5,118			5,512
Total current assets		975,453			904,137
Property and equipment, net		11,279			8,488
Deferred income tax assets		34,907			48,558
Operating lease right-of-use assets		13,819			1,087
Intangible assets, net		31,836			7,909
Goodwill		67,940			18,915
Other assets		1,654			2,263
Total assets	$	1,136,888		$	991,357
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,272		$	463
Accrued expenses and other current liabilities		31,245			25,270
Deferred revenue, current		105,238			84,907
Operating lease liabilities, current		1,752			642
Total current liabilities		139,507			111,282
Deferred revenue, non-current		198			78
Operating lease liabilities, non-current		13,885			447
Contingent earn-out consideration liability, non-current		15,942			—
Other liabilities, non-current		1,240			956
Total liabilities		170,772			112,763
Stockholders' Equity
Preferred stock		—			—
Common stock		194			192
Additional paid-in capital		762,150			702,589
Accumulated other comprehensive loss		(14,083	)		(15,294	)
Retained earnings		217,855			191,107
Total stockholders' equity		966,116			878,594
Total liabilities and stockholders’ equity	$	1,136,888		$	991,357

DOXIMITY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)
	Three Months Ended March 31,					Fiscal Year Ended March 31,
		2023		2022			2023		2022
Revenue	$	110,966	$	93,653		$	419,052	$	343,548
Cost of revenue^(1)		13,677		11,765			53,490		39,787
Gross profit		97,289		81,888			365,562		303,761
Operating expenses^(1):
Research and development		21,541		17,424			80,186		62,350
Sales and marketing		33,148		25,899			123,523		92,129
General and administrative		9,759		10,644			36,745		35,746
Total operating expenses		64,448		53,967			240,454		190,225
Income from operations		32,841		27,921			125,108		113,536
Other income (expense), net		3,875		(16	)		8,048		469
Income before income taxes		36,716		27,905			133,156		114,005
Provision for (benefit from) income taxes		6,048		(8,821	)		20,338		(40,778	)
Net income	$	30,668	$	36,726		$	112,818	$	154,783
Undistributed earnings attributable to participating securities		—		—			—		(21,526	)
Net income attributable to Class A and Class B common stockholders, basic and diluted	$	30,668	$	36,726		$	112,818	$	133,257
Net income per share attributable to Class A and Class B common stockholders:
Basic	$	0.16	$	0.19		$	0.58	$	0.82
Diluted	$	0.14	$	0.17		$	0.53	$	0.70
Weighted-average shares used in computing net income per share attributable to Class A and Class B common stockholders:
Basic		193,829		191,579			193,176		163,484
Diluted		212,742		215,862			213,425		191,017

(1) Costs and expenses include stock-based compensation expense as follows (in thousands):

	Three Months Ended March 31,				Fiscal Year Ended March 31,
		2023		2022		2023		2022
Cost of revenue	$	2,425	$	2,006	$	9,634	$	4,979
Research and development		3,167		2,201		12,583		7,065
Sales and marketing		5,027		2,533		16,939		8,108
General and administrative		2,372		3,069		8,678		11,290
Total stock-based compensation expense	$	12,991	$	9,809	$	47,834	$	31,442

DOXIMITY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
	Three Months Ended March 31,						Fiscal Year Ended March 31,
		2023			2022			2023			2022
Cash flows from operating activities
Net income	$	30,668		$	36,726		$	112,818		$	154,783
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,708			1,368			10,283			5,040
Deferred income taxes		3,834			(9,275	)		13,226			(41,247	)
Stock-based compensation, net of amounts capitalized		12,991			9,809			47,834			31,442
Non-cash lease expense		537			302			2,027			1,159
Amortization (accretion) of premium (discount) on marketable securities, net		(29	)		1,469			3,115			4,332
Loss on sale of marketable securities		—			708			1,093			1,231
Amortization of deferred contract costs		2,428			2,389			8,785			9,755
Other		657			288			1,454			410
Changes in operating assets and liabilities, net of effect of acquisition:
Accounts receivable		(32,433	)		(11,439	)		(26,242	)		(31,017	)
Prepaid expenses and other assets		(5,372	)		(2,086	)		(3,448	)		(9,089	)
Deferred contract costs		(2,053	)		(2,937	)		(8,462	)		(9,609	)
Accounts payable, accrued expenses and other liabilities		(2,918	)		571			(195	)		8,664
Deferred revenue		35,625			19,367			17,527			1,828
Operating lease liabilities		(4	)		(296	)		(213	)		(1,107	)
Net cash provided by operating activities		46,639			46,964			179,602			126,575
Cash flows from investing activities
Cash paid for acquisition		—			—			(53,500	)		—
Purchases of property and equipment		(21	)		(1,060	)		(1,701	)		(1,912	)
Internal-use software development costs		(1,005	)		(1,049	)		(4,483	)		(3,785	)
Purchases of marketable securities		(60,303	)		(45,278	)		(190,560	)		(1,317,193	)
Maturities of marketable securities		48,125			6,302			83,139			47,919
Sales of marketable securities		—			16,864			107,182			633,802
Other		—			595			—			595
Net cash used in investing activities		(13,204	)		(23,626	)		(59,923	)		(640,574	)
Cash flows from financing activities
Proceeds from issuance of common stock upon initial public offering after deducting underwriting discounts and commissions		—			—			—			553,905
Proceeds from issuance of common stock upon exercise of stock options and common stock warrants		2,471			3,378			9,926			12,612
Proceeds from issuance of common stock in connection with the employee stock purchase plan		2,418			1,395			4,759			1,395
Taxes paid related to net share settlement of equity awards		(1,469	)		(381	)		(3,822	)		(817	)
Repurchase of common stock		(15,282	)		—			(85,324	)		(2,698	)
Payments of deferred offering costs		—			—			—			(3,982	)
Net cash provided by (used in) financing activities		(11,862	)		4,392			(74,461	)		560,415
Net increase in cash and cash equivalents		21,573			27,730			45,218			46,416
Cash and cash equivalents, beginning of period		136,454			85,079			112,809			66,393
Cash and cash equivalents, end of period	$	158,027		$	112,809		$	158,027		$	112,809

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company uses the following non-GAAP measures of financial performance:

• Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP net income margin, and non-GAAP basic and diluted net income per common share: We exclude the effect of stock-based compensation expense, amortization of acquired intangible assets, change in fair value of contingent earn-out consideration liability, and expenses associated with acquisitions from non-GAAP gross profit, non-GAAP gross margin and non-GAAP operating income. Non-GAAP net income and non-GAAP net income margin are further adjusted for estimated income tax on such adjustments. We calculate income taxes on the adjustments by applying an estimated annual effective tax rate to the adjustments. Non-GAAP basic and diluted net income per common share is non-GAAP net income attributable to common stockholders divided by the weighted average number of shares. For both basic and diluted non-GAAP net income per share, the weighted average shares we use in computing non-GAAP net income per share is equal to our GAAP weighted average shares. Non-GAAP gross margin represents non-GAAP gross profit as a percentage of revenue and non-GAAP net income margin represents non-GAAP net income as a percentage of revenue.

• Adjusted EBITDA and adjusted EBITDA margin: We define adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization, and as further adjusted for acquisition and other related expenses, stock-based compensation expense, change in fair value of contingent earn-out consideration liability, and other income, net. Net income margin represents net income as a percentage of revenue and adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue.

• Free cash flow: We calculate free cash flow as cash flow from operating activities less purchases of property and equipment and internal-use software development costs.

We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP to non-GAAP results.

Key Business Metrics¹

• Net revenue retention rate: Net revenue retention rate is calculated by taking the trailing 12-month (“TTM”) subscription-based revenue from our customers that had revenue in the prior TTM period and dividing that by the total subscription-based revenue for the prior TTM period. Our net revenue retention rate compares our subscription revenue from the same set of customers across comparable periods, and reflects customer renewals, expansion, contraction, and churn. Our net revenue retention rate is directly tied to our revenue growth rate and thus fluctuates as that growth rate fluctuates.

• Customers with trailing 12-month subscription revenue greater than $100,000 and $10 million: The number of customers with TTM subscription revenue greater than $100,000 and $10 million is a key indicator of the scale of our business, and is calculated by counting the number of customers that contributed more than $100,000 and $10 million in subscription revenue in the TTM period. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity, and we present our total customer count for historical periods reflecting these adjustments.

¹The metric excludes the impact of the AMiON acquisition, which closed on April 1, 2022, including customers of, and subscription revenue generated from, the AMiON on-call scheduling and messaging application, and the impact of such acquisition was immaterial to the periods presented.

Reconciliation of GAAP to Non-GAAP Financial Measures

The following tables reconcile the specific items excluded from GAAP metrics in the calculation of non-GAAP metrics for the periods shown below:

	Three Months Ended March 31,						Fiscal Year Ended March 31,
		2023			2022			2023			2022
	(unaudited)
	(in thousands, except percentages)
Net income	$	30,668		$	36,726		$	112,818		$	154,783
Adjusted to exclude the following:
Acquisition and other related expenses		—			254			30			254
Stock-based compensation		12,991			9,809			47,834			31,442
Depreciation and amortization		2,708			1,368			10,283			5,040
Provision for (benefit from) income taxes		6,048			(8,821	)		20,338			(40,778	)
Change in fair value of contingent earn-out consideration liability		405			—			728			—
Other income (expense), net		(3,875	)		16			(8,048	)		(469	)
Adjusted EBITDA	$	48,945		$	39,352		$	183,983		$	150,272
Revenue	$	110,966		$	93,653		$	419,052		$	343,548
Net income margin		27.6	%		39.2	%		26.9	%		45.1	%
Adjusted EBITDA margin		44.1	%		42.0	%		43.9	%		43.7	%

	Three Months Ended March 31,						Fiscal Year Ended March 31,
		2023			2022			2023			2022
	(unaudited)
	(in thousands)
Net cash provided by operating activities	$	46,639		$	46,964		$	179,602		$	126,575
Purchases of property and equipment		(21	)		(1,060	)		(1,701	)		(1,912	)
Internal-use software development costs		(1,005	)		(1,049	)		(4,483	)		(3,785	)
Free cash flow	$	45,613		$	44,855		$	173,418		$	120,878
Other cash flow components:
Net cash used in investing activities	$	(13,204	)	$	(23,626	)	$	(59,923	)	$	(640,574	)
Net cash provided by (used in) financing activities	$	(11,862	)	$	4,392		$	(74,461	)	$	560,415

	Three Months Ended March 31,						Fiscal Year Ended March 31,
		2023			2022			2023			2022
	(unaudited)
	(in thousands, except per share data and percentages)
GAAP cost of revenue	$	13,677		$	11,765		$	53,490		$	39,787
Adjusted to exclude the following:
Stock-based compensation		(2,425	)		(2,006	)		(9,634	)		(4,979	)
Amortization of acquired intangibles		(137	)		—			(548	)		—
Non-GAAP cost of revenue	$	11,115		$	9,759		$	43,308		$	34,808
GAAP gross profit	$	97,289		$	81,888		$	365,562		$	303,761
Adjusted to exclude the following:
Stock-based compensation		2,425			2,006			9,634			4,979
Amortization of acquired intangibles		137			—			548			—
Non-GAAP gross profit	$	99,851		$	83,894		$	375,744		$	308,740
GAAP gross margin		87.7	%		87.4	%		87.2	%		88.4	%
Non-GAAP gross margin		90.0	%		89.6	%		89.7	%		89.9	%
GAAP research and development expense	$	21,541		$	17,424		$	80,186		$	62,350
Adjusted to exclude the following:
Stock-based compensation		(3,167	)		(2,201	)		(12,583	)		(7,065	)
Non-GAAP research and development expense	$	18,374		$	15,223		$	67,603		$	55,285
GAAP sales and marketing expense	$	33,148		$	25,899		$	123,523		$	92,129
Adjusted to exclude the following:
Stock-based compensation		(5,027	)		(2,533	)		(16,939	)		(8,108	)
Amortization of acquired intangibles		(979	)		(252	)		(4,164	)		(1,046	)
Change in fair value of contingent earn-out consideration liability		(405	)		—			(728	)		—
Non-GAAP sales and marketing expense	$	26,737		$	23,114		$	101,692		$	82,975
GAAP general and administrative expense	$	9,759		$	10,644		$	36,745		$	35,746
Adjusted to exclude the following:
Acquisition and other related expenses		—			(254	)		(30	)		(254	)
Stock-based compensation		(2,372	)		(3,069	)		(8,678	)		(11,290	)
Non-GAAP general and administrative expense	$	7,387		$	7,321		$	28,037		$	24,202
GAAP operating expense	$	64,448		$	53,967		$	240,454		$	190,225
Adjusted to exclude the following:
Acquisition and other related expenses		—			(254	)		(30	)		(254	)
Stock-based compensation		(10,566	)		(7,803	)		(38,200	)		(26,463	)
Amortization of acquired intangibles		(979	)		(252	)		(4,164	)		(1,046	)
Change in fair value of contingent earn-out consideration liability		(405	)		—			(728	)		—
Non-GAAP operating expense	$	52,498		$	45,658		$	197,332		$	162,462
GAAP operating income	$	32,841		$	27,921		$	125,108		$	113,536
Adjusted to exclude the following:
Acquisition and other related expenses		—			254			30			254
Stock-based compensation		12,991			9,809			47,834			31,442
Amortization of acquired intangibles		1,116			252			4,712			1,046
Change in fair value of contingent earn-out consideration liability		405			—			728			—
Non-GAAP operating income	$	47,353		$	38,236		$	178,412		$	146,278
GAAP net income	$	30,668		$	36,726		$	112,818		$	154,783
Adjusted to exclude the following:
Acquisition and other related expenses		—			254			30			254
Stock-based compensation		12,991			9,809			47,834			31,442
Amortization of acquired intangibles		1,116			252			4,712			1,046
Change in fair value of contingent earn-out consideration liability		405			—			728			—
Income tax effect of non-GAAP adjustments^(1)		(3,048	)		(2,166	)		(11,194	)		(6,876	)
Non-GAAP net income	$	42,132		$	44,875		$	154,928		$	180,649
Non-GAAP net income margin		38.0	%		47.9	%		37.0	%		52.6	%
GAAP undistributed earnings attributable to participating securities	$	—		$	—		$	—		$	(21,526	)
Impact on undistributed earnings attributable to participating securities due to non-GAAP adjustments		—			—			—			(2,616	)
Non-GAAP undistributed earnings attributable to participating securities	$	—		$	—		$	—		$	(24,142	)
Non-GAAP net income	$	42,132		$	44,875		$	154,928		$	180,649
Non-GAAP undistributed earnings attributable to participating securities		—			—			—			(24,142	)
Non-GAAP net income attributable to Class A and Class B stockholders, basic and diluted	$	42,132		$	44,875		$	154,928		$	156,507
Weighted-average shares used in computing net income per share attributable to Class A and Class B common stockholders:
Basic		193,829			191,579			193,176			163,484
Diluted		212,742			215,862			213,425			191,017
Non-GAAP net income per share attributable to Class A and Class B stockholders:
Basic	$	0.22		$	0.23		$	0.80		$	0.96
Diluted	$	0.20		$	0.21		$	0.73		$	0.82

⁽¹⁾ For the three months and fiscal years ended March 31, 2023 and 2022, management used an estimated annual effective non-GAAP tax rate of 21.0%.