Summary
Doximity posted fiscal 2022 second quarter revenue of $79.4 million, up 75.9% from $45.1 million a year earlier, as pharmaceutical manufacturers and health systems kept shifting budgets to digital channels. Gross profit of $70.4 million rose 86.9%, and gross margin expanded to 88.7% from 83.5%. Operating income of $24.95 million climbed 139.1% from $10.4 million, lifting operating margin to 31.4% from 23.1%. Net income of $36.1 million was up 259.5% from $10.0 million, a much faster gain than the operating line because the quarter carried a tax benefit tied to stock option deductions after the June 2021 initial public offering. Diluted EPS was $0.17 versus $0.02.
The six month picture tells the same story. Revenue for the six months ended September 30, 2021 reached $152.0 million, up 86.5% from $81.5 million. Net income for the period was $62.4 million, up 442.9%. Cash generation followed the earnings. Operating cash flow was $19.2 million in the quarter, up 50.8% from $12.7 million, and $52.3 million for the six months, up 143.8%. Free cash flow, a non-GAAP measure that also subtracts equipment purchases and capitalized software, was $18.1 million versus $11.3 million. Capital expenditures were just $0.2 million. Current deferred revenue stood at $78.7 million at September 30, 2021. Management said revenue converted faster than billings, which pulled deferred revenue down over the six months even as bookings grew.
Growth is coming from accounts Doximity already has. Net revenue retention over the trailing 12 months was 173%, up from 139%, and the number of customers paying at least $100,000 a year reached 235. That group generated roughly 89% of trailing 12 month revenue, a reminder of how concentrated the customer base remains. Subscription revenue supplied most of the quarterly increase. Of that increase, $7.2 million came from new subscription customers and $25.9 million from expansion at existing ones. The company pointed to an 18% rise in the average number of modules per marketing solutions customer and a 19% rise in the average number of brands. Its telehealth tools reached more than 330,000 active providers.
Non-GAAP numbers were strong but smaller. Adjusted EBITDA was $32.8 million for the quarter, up 160% from $12.6 million, for a 41% margin versus 28%. Non-GAAP net income was $41.6 million, and non-GAAP diluted EPS was $0.19 versus $0.02. Guidance points to sequential growth. For the fiscal third quarter ending December 31, 2021, Doximity guided to revenue and adjusted EBITDA above the just-reported quarter, with adjusted EBITDA of $32.0 million to $33.0 million. For the full fiscal year ending March 31, 2022, it guided to adjusted EBITDA of $127.6 million to $129.6 million and raised its full year revenue outlook. Both sets of guidance are non-GAAP at the adjusted EBITDA line.
Risks are worth watching. The lock-up agreements signed around the June 2021 IPO expire at the opening of trading on November 12, 2021, which opens the door for insiders to sell shares into the market. The company also listed familiar risks in its filings: the COVID-19 pandemic, its ability to keep and add members, its ability to win and retain customers, security breaches or unauthorized access to member data, and the tension created by prioritizing member interests over customer demands. Cost trends deserve attention too. General and administrative expense grew faster than any other operating line as public company accounting, legal, and insurance costs arrived, and headcount rose across the business. Management said it expects gross margin to stay relatively steady in the near term but to fluctuate from quarter to quarter.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $79.3M | $72.7M | +9.2% | — | — |
| Gross profit | $70.4M | $64.7M | +8.8% | — | — |
| Gross margin | 88.7% | 89.0% | -0.3 pp | — | — |
| Research & development | $15.5M | $13.2M | +16.8% | — | — |
| Sales & marketing | $21.2M | $19.4M | +9.2% | — | — |
| General & administrative | $8.8M | $7.2M | +22.7% | — | — |
| Total operating expenses | $45.4M | $39.8M | +14.2% | — | — |
| Operating income (loss) | $25.0M | $24.9M | +0.3% | — | — |
| Operating margin | 31.4% | 34.2% | -2.8 pp | — | — |
| Net income (loss) | $36.1M | $26.3M | +37.1% | — | — |
| Net margin | 45.5% | 36.2% | +9.3 pp | — | — |
| Diluted EPS | $0.17 | $0.09 | +$0.08 | — | — |
Risks
Doximity experienced rapid growth, with revenue growing 76% for the three months ended September 30, 2021 and 87% for the six months ended September 30, 2021, while headcount rose from 713 as of March 31, 2021 to 799 as of September 30, 2021. The company warns this expansion strains management, personnel, systems, technical performance, and internal controls and may not be managed effectively.
The filing states that historical revenue growth is not indicative of future growth and that the company expects its revenue growth rate will decline. MD&A highlights strong recent growth but notes future margins and profitability depend on addressing challenges and that revenue growth may decline due to competition, regulatory changes, or business maturation.
The company expects to invest heavily in growth, which may increase sales and marketing, research and development, and other expenses and cause margins to decline. Telehealth Solutions have experienced significant growth and may bring increased price competition and costs, potentially adversely affecting margins if they grow as a portion of overall business.
Most customers engage on particular marketing campaigns, and the company does not typically enter into long-term contracts with pharmaceutical manufacturer customers who represent a significant portion of revenue. Customers can generally terminate relationships, may have brand-level budgets, and may not renew or may renew on less favorable terms, which could materially harm revenue and results.
Doximity expects increasing competition in its markets, including from large technology companies such as LinkedIn, Facebook, Google, and Twitter for medical professional members, WebMD's Medscape for marketing solutions, and American Well, Teladoc Health, and Zoom Video Communications for telehealth. Increased competition could cause pricing pressure, loss of market share, or decreased member engagement.
Doximity is a Business Associate under HIPAA and may face significant civil and criminal penalties for noncompliance, including penalties in excess of pre-set annual limits. State fee-splitting, anti-kickback, and healthcare laws may also apply, and failure to comply could lead to penalties, contract invalidation, refunds, or loss of provider licenses.
The company is subject to complex and changing privacy laws including HIPAA, CCPA, CPRA, and GDPR, and GDPR violations can lead to fines of up to the greater of 20 million Euros or 4% of worldwide annual revenue. Compliance costs and potential liability could increase and adversely affect the business.
Doximity's platform stores and transmits sensitive information, including protected health information and personal information, so a Security Breach could result in regulatory investigations, litigation, indemnity obligations, negative publicity, and financial loss. The risk of cyber-attack may be elevated due to increased attacks on U.S. businesses during the COVID-19 outbreak and remote work arrangements.
In the six months ended September 30, 2021, one customer accounted for 10% of total revenue, and in the three months ended September 30, 2020, two customers accounted for 10% of total revenue. The sudden loss or renegotiation of a largest customer could significantly impact revenue, revenue growth rate, reputation, and ability to obtain new customers.
The COVID-19 pandemic shifted many Marketing Solutions customers from in-person marketing to online solutions, and if these customers reallocate budgets back to in-person marketing, growth could decline. Hiring Solutions were negatively impacted as doctors changed jobs and traveled less for temporary positions, and telehealth demand may decline after the pandemic.
The telehealth market is immature and volatile, and the increased demand from COVID-19 may decline in the future. If the market does not develop, develops more slowly than expected, encounters negative publicity, or if Doximity cannot demonstrate and promote benefits, business and results could be materially harmed.
The company depends on senior management and key personnel, including its Chief Executive Officer and Chief Commercial Officer, and competition for qualified employees is intense, especially in the San Francisco Bay Area. Fluctuations in the stock price may make equity compensation less effective for motivating and retaining employees.
Members use Doximity's platform for telephone, text message, and facsimile communications, which are subject to laws such as the Telephone Consumer Protection Act. Violations can lead to statutory damages of $500 per call, text, or facsimile, treble damages for willful or knowing violations, and there is no statutory cap on maximum aggregate exposure.
The dual class structure gives Class B common stock ten votes per share, and holders including executive officers, directors, and their affiliates held approximately 96.2% of voting power as of September 30, 2021. This concentrates voting control and limits or precludes other stockholders from influencing corporate matters.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Free Cash Flow
Adjusted EBITDA
Summary, forecast, risks and KPIs are extracted from Doximity, Inc.'s SEC filings for Q2 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.