Analyzing and explaining Doximity (DOCS) Q2 2025 financial results
Doximity, Inc. operates an online platform for physicians and medical professionals in the United States. The company helps physicians collaborate with each other, share the latest medical news and research, manage their careers, and visit virtual patients.
Doximity, Inc. operates an online platform for physicians and medical professionals in the United States. The company helps physicians collaborate with each other, share the latest medical news and research, manage their careers, and visit virtual patients. Its main customers are pharmaceutical companies and medical institutions, for which it provides marketing and recruitment solutions. The company reported financial results for the third quarter of FY2025. Revenues reached $136.83 million, up 20% from the same period last year, and net income increased $30.6 million to $441.54 million, up from $144.15 million the previous year.
Subscription services, which accounted for about 95% of sales, were the main growth driver. In particular, the Marketing Solutions division saw a 22% increase in average revenue due to the acquisition of new clients and expansion of existing clients, with subscription revenue increasing by approximately $230,000 to $129.63 million year over year. The Hiring Solutions division also showed solid growth and contributed significantly to total revenue.
Cost of sales increased 7% y/y, but gross profit increased 22% to $123.15 million due to higher sales. Gross margin remained at 90%. The main cost increases were due to higher stock-based compensation and third-party software costs.
R&D expenses increased 16% YoY to $23.24 million, primarily due to an increase in stock-based compensation for new employees. Sales and marketing expenses also increased 14% to $34.36 million, also due to an increase in stock-based compensation. General and administrative expenses increased 13% to $10.1 million, driven by higher legal expenses.
An impairment charge of $2.3 million was recorded for the sublease of office space. In addition, a one-time charge of $2.9 million was incurred for expenses related to the restructuring plan implemented in August 2023.
Cash flow from operating activities increased to $195.89 million. In addition to the increase in net income, non-cash items such as stock-based compensation and impairment charges contributed to the increase. Cash flow from investing activities decreased to $54.099 million, mainly due to purchases of marketable securities. Financing activities used cash of $76.225 million, a significant decrease from the use of $186.94 million in the same period last year. This was mainly due to stock repurchases.
Doximity approved a share repurchase program to repurchase up to $500 million of Class A common stock on May 1, 2024; as of September 30, 2024, 1,021,233 shares had been repurchased for $30 million, with the remaining $470 million still available.
On the balance sheet, cash and cash equivalents and marketable securities totaled $756.23 million. Liabilities decreased to $157.32 million and shareholders’ equity increased to $961.19 million.
b. Condensed Consolidated Statements of Operations
Item
Three Months Ended Sep 30, 2024
Three Months Ended Sep 30, 2023
Six Months Ended Sep 30, 2024
Six Months Ended Sep 30, 2023
Revenue
$136,832k
$113,612k
$263,508k
$222,081k
Cost of revenue
$13,676k
$12,759k
$27,226k
$25,912k
Gross profit
$123,156k
$100,853k
$236,282k
$196,169k
Research and development
$23,240k
$19,958k
$45,814k
$41,889k
Sales and marketing
$34,367k
$30,201k
$69,611k
$64,656k
General and administrative
$10,103k
$8,966k
$19,358k
$18,213k
Restructuring and impairment charge
$2,304k
$7,936k
$2,304k
$7,936k
Total operating expenses
$70,014k
$67,061k
$137,087k
$132,694k
Income from operations
$53,142k
$33,792k
$99,195k
$63,475k
Other income, net
$9,029k
$5,903k
$16,145k
$10,742k
Income before income taxes
$62,171k
$39,695k
$115,340k
$74,217k
Provision for income taxes
$18,017k
$9,093k
$29,809k
$15,209k
Net income
$44,154k
$30,602k
$85,531k
$59,008k
c. Condensed Consolidated Statements of Cash Flows
Item
Six Months Ended Sep 30, 2024
Six Months Ended Sep 30, 2023
Cash flows from operating activities
$109,589k
$70,098k
Cash flows from investing activities
$54,099k
$67,224k
Cash flows from financing activities
$(76,225)k
$(186,946)k
Net increase (decrease) in cash and cash equivalents
$87,463k
$(49,624)k
Cash and cash equivalents, end of period
$184,248k
$108,403k
Liquidity and Capital Resources
As of September 30, 2024, Doximity held cash and cash equivalents along with marketable securities totaling approximately $805.6 million. This liquidity position is deemed sufficient to support working capital and capital expenditure requirements for at least the next 12 months.
Stockholders’ Equity and Share Activity
Shares Outstanding (September 30, 2024):
Class A: 128,135,991 shares
Class B: 58,555,770 shares
Share Repurchase Programs:
Authorized to repurchase up to $500 million of Class A common stock as of May 1, 2024.
As of September 30, 2024, $30.0 million worth of Class A shares were repurchased and retired, with $470.0 million remaining authorized.
Risk Factors
Legal Risks: Ongoing lawsuits, including securities litigation and derivative lawsuits, pose potential financial impacts.
Market Risks: Exposure to interest rate fluctuations and inflation can affect investment valuations and income.
Financing Risks: Potential need for additional capital to support growth and strategic initiatives, which may not be obtainable on favorable terms.
