Summary
Doximity reported revenue of $115.3 million for its fiscal 2023 third quarter ended December 31, 2022, up 17.8% from $97.9 million a year earlier. Revenue for the nine months reached $308.1 million, up 23.3%. Subscription revenue did the heavy lifting. It rose $16.4 million, split evenly between new customers and expansion within existing accounts, with each contributing $8.2 million. Average revenue per existing Marketing Solutions customer grew 15% in the quarter and 20% over the nine months. Subscription customers produced about 93% of quarterly revenue.
Gross profit of $101.7 million rose 17.2%, but gross margin slipped to 88.3% from 88.7%, down 0.4 percentage points. On a nine-month basis gross margin was 87.1%, down 1.7 percentage points. Operating income came in at $38.5 million, up 7.5%, while operating margin fell to 33.4% from 36.6%, a decline of 3.2 percentage points. The nine-month operating margin was 29.9%, down 4.3 percentage points. Cost of revenue and sales and marketing both grew faster than revenue, with headcount additions and higher stock-based compensation driving the increase. The bottom line took a harder hit. Net income of $33.5 million was down 39.9% from $55.6 million, and diluted EPS of $0.16 was down $0.10 from $0.26. A swing in the income tax line, from a benefit a year ago to expense this quarter as stock option tax deductions shrank, explains most of that gap.
Cash generation was the standout. Operating cash flow of $48.7 million rose 78.5% in the quarter, and the nine-month figure of $133.0 million was up 67.0%. Free cash flow, defined as operating cash flow less purchases of property and equipment and internal-use software costs, was $47.5 million against $25.6 million, an 85% increase. Capital expenditures were $0.2 million, down from $0.6 million. Adjusted EBITDA of $55.5 million rose 18% and carried a 48.2% margin versus 48.0%. Non-GAAP net income of $45.8 million compared with $63.6 million, and non-GAAP diluted EPS was $0.22 versus $0.29.
Customer metrics show scale but cooling expansion. Doximity counted 290 customers with trailing 12-month subscription revenue above $100,000, up from 258, and that group represented roughly 87% of revenue for the trailing period. Net revenue retention came in at 119%, down from 171%, a sign that the pandemic-era pace of expansion has eased. Management pointed to record use of clinical workflow tools, including a telehealth platform that served 375,000 unique active clinicians.
Guidance covers the next quarter and the full fiscal year. For the fiscal fourth quarter ending March 31, 2023, the company guided adjusted EBITDA to between $45.2 million and $46.2 million. For the full fiscal year ending March 31, 2023, it set adjusted EBITDA at between $180.2 million and $181.2 million. Preliminary guidance for the fiscal year ending March 31, 2024, calls for an adjusted EBITDA margin of 43% or greater.
The company's own risk list covers COVID-19 disruption, member retention, customer acquisition, security breaches, and the difficulty of managing rapid growth. Capital allocation is another moving part. Doximity authorized a new $70 million share repurchase program on October 28, 2022 and bought back no shares under it during the quarter. Deferred revenue, current, stood at $69.7 million, up 6.2% from a year earlier. Management said existing cash, cash equivalents, and marketable securities should fund working capital and capital expenditure needs for at least the next 12 months.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $115.3M | $102.2M | +12.8% | $97.9M | +17.8% |
| Gross profit | $101.7M | $89.0M | +14.3% | $86.8M | +17.2% |
| Gross margin | 88.3% | 87.1% | +1.2 pp | 88.7% | -0.4 pp |
| Research & development | $20.5M | $19.1M | +7.4% | $16.2M | +26.5% |
| Sales & marketing | $33.2M | $29.0M | +14.5% | $25.7M | +29.3% |
| General & administrative | $9.5M | $8.7M | +8.7% | $9.1M | +4.8% |
| Total operating expenses | $63.3M | $56.9M | +11.2% | $51.0M | +24.0% |
| Operating income (loss) | $38.5M | $32.1M | +19.9% | $35.8M | +7.5% |
| Operating margin | 33.4% | 31.4% | +2.0 pp | 36.6% | -3.2 pp |
| Net income (loss) | $33.5M | $26.3M | +27.3% | $55.6M | -39.9% |
| Net margin | 29.0% | 25.7% | +3.3 pp | 56.9% | -27.8 pp |
| Diluted EPS | $0.16 | $0.12 | +$0.04 | $0.26 | -$0.10 |
Risks
Net revenue retention rate declined to 119% at December 31, 2022 from 171% at December 31, 2021, and the MD&A states it is directly tied to revenue growth and fluctuates as that growth rate fluctuates. If existing customers renew on less favorable terms, fail to purchase additional solutions, or reduce spending, revenue growth could slow.
Operating margin declined to 33.4% in the quarter ended December 31, 2022 from 36.6% a year earlier, and net income fell 39.9% as operating expenses grew faster than revenue. The filing states Doximity expects to invest heavily in growth, which may cause sales and marketing, research and development, and other expenses to increase and margins to decline.
For the three months ended December 31, 2022, Doximity had income tax expense of $7.5 million versus a benefit of $19.8 million in the prior-year period, primarily driven by decreased tax deductions from stock option activities. This change contributed to net income down 39.9% and diluted EPS down 38.5% in the current quarter.
Doximity is subject to stringent and changing privacy, data protection, and healthcare laws, including HIPAA as a Business Associate, CCPA, CPRA, state fee-splitting and anti-kickback laws, and TCPA. Compliance failures could result in significant fines, penalties, contract terminations, refunds, or changes to business practices.
Risk factors cite increased economic uncertainty in the United States and abroad, inflation, reduced discretionary spending, and the potential for a global recession. Customers may reduce spending on Doximity's solutions, delay purchasing decisions, seek extended billing terms or pricing discounts, any of which could limit growth and negatively affect operating results.
Revenue is relatively concentrated within a small number of key customers and marketing agencies; for the nine months ended December 31, 2021, one customer accounted for 10% or more of total revenue, though none did in the current quarter or year-to-date periods. The sudden loss or renegotiation of a largest customer or agency could significantly impact revenue and growth rate.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Free Cash Flow
Adjusted EBITDA
Net Revenue Retention
Summary, forecast, risks and KPIs are extracted from Doximity, Inc.'s SEC filings for Q3 FY2023 (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 1, 2026.