Doximity, Inc. Q2 FY2025 earnings

Doximity reported revenue of $136.8 million for its fiscal 2025 second quarter, up 20% from a year earlier, and $263.5 million for the six months ended September 30, 2024, up 18.7%. Net income was $44.2 million, up 44%, and diluted EPS came in at $0.22, up from $0.15. Adjusted EBITDA reached $76.1 million, up 41%, at a margin of 55.7% versus 47.7% in the prior-year quarter. Non-GAAP net income was $61.1 million, or $0.30 per diluted share, against $45.6 million and $0.22 a year earlier.

Profitability improved faster than the top line. Gross margin was 90.0%, up from 88.8%, and the operating margin was 38.8%, up from 29.7%. Operating income of $53.1 million rose 57.3% from the prior-year quarter. Research and development expense rose 16% to $23.2 million, sales and marketing expense rose 14% to $34.4 million, and general and administrative expense rose 13% to $10.1 million. Stock-based compensation totaled $17.9 million for the quarter. A $2.3 million restructuring and impairment charge tied to a sublease of the Curative office space in Irving, Texas, landed in the period, compared with $7.9 million a year earlier from a restructuring plan that cut 10% of the workforce.

Demand indicators held firm. The company counted 103 customers with at least $500,000 of trailing twelve-month subscription spending, up from 92 a year earlier, and that cohort produced roughly 83% of revenue for the trailing twelve months ended September 30, 2024. Net revenue retention was 116%, up from 114%. Subscription accounts made up about 95% of revenue in the quarter, with the increase split between new customers and expansion of existing accounts. Average spending per existing Marketing Solutions customer climbed approximately 22%. The clinical workflow tools saw record use, with more than 600,000 unique active prescribers.

Cash generation was the standout line. Operating cash flow of $68.3 million for the quarter rose 430% from $12.9 million a year earlier, and free cash flow of $66.8 million rose 475% from $11.6 million. Operating cash flow for the six months ended September 30, 2024 was $109.6 million. Capital expenditures were $0.00 million in the quarter, down from $0.04 million a year earlier. Cash, cash equivalents and marketable securities totaled $805.6 million at September 30, 2024. Current deferred revenue of $93.8 million was up 2.5% from the prior-year quarter.

Guidance points to continued growth. For the fiscal third quarter ending December 31, 2024, management guided to adjusted EBITDA of $83 million to $84 million and also issued a revenue outlook for that quarter. For the full fiscal year ending March 31, 2025, adjusted EBITDA guidance is $274 million to $279 million, alongside revenue guidance for the year. On capital allocation, the board authorized a $500 million repurchase program in May 2024, and 1,021,233 shares were repurchased for $30.0 million, leaving $470.0 million available. The filing flags risks around retaining members and growing their engagement, attracting and keeping customers, security breaches or unauthorized access to member data, and a competitive, rapidly changing environment with macroeconomic uncertainty. It also notes that the Tax Cuts and Jobs Act requirement to capitalize and amortize research and development expenditures may reduce operating cash flow in future periods, with the amounts and timing not estimable.