Summary
Doximity's fiscal 2024 third quarter ended December 31, 2023 with growth on both the top and bottom lines. Revenue was $135.3 million, up 17.4% from $115.3 million in the prior-year quarter. Through the first nine months of the fiscal year, revenue reached $357.4 million, up 16.0%. Gross profit rose 21.0% to $123.1 million in the quarter. Net income rose 43.3% to $48.0 million, and diluted EPS was $0.24 versus $0.16.
Operating leverage drove the profit picture. Operating income climbed 52.1% to $58.6 million, and operating margin expanded to 43.3% from 33.4%. Gross margin reached 91.0%, up from 88.3%, helped by lower cost of revenue after the August 2023 restructuring. Adjusted EBITDA was $73.3 million, a 54.2% margin, against 48.2% a year earlier. Non-GAAP net income was $58.5 million, a 43.2% margin versus 39.7%, and non-GAAP diluted EPS was $0.29 versus $0.22.
Cash generation was less dramatic. Operating cash flow for the quarter was $50.1 million, up 2.8%. Free cash flow, which the company defines as operating cash flow less purchases of property and equipment and internal-use software development costs, was $48.7 million, up 3%. For the nine months, free cash flow was $116.0 million against $127.8 million a year earlier. Over the first nine months, operating cash flow fell 9.6% to $120.2 million, pressured by a $38.6 million decrease in deferred revenue tied to the timing of customer billings and program launches and by larger tax payments. Capital expenditures were just $0.04 million in the quarter, down 82.4%.
Engagement metrics moved in different directions. The net revenue retention rate slipped to 115% at December 31, 2023 from 119% a year earlier. The number of customers with at least $100,000 in trailing 12-month subscription revenue rose to 289 from 282. Management said the company now counts 17 of the top 22 U.S. hospitals as enterprise software clients. Subscription revenue added $22.0 million in the quarter, of which $6.0 million came from new customers and $16.0 million from expansion of existing ones. Average revenue per existing Marketing Solutions customer rose 26%, and roughly 96% of quarterly revenue came from subscription customers.
Guidance spans two horizons. For the fiscal fourth quarter ending March 31, 2024, management guided to a top line between $115.9 million and $116.9 million and adjusted EBITDA between $50.5 million and $51.5 million. For the full fiscal year 2024, top line guidance sits between $473.3 million and $474.3 million, with adjusted EBITDA between $224.5 million and $225.5 million.
The balance sheet stays liquid. Cash and cash equivalents plus marketable securities totaled $710.2 million at December 31, 2023. Deferred revenue, current, was $66.7 million, down 4.3% from a year earlier. Doximity retired 331,960 Class A shares for $8.0 million under a $70 million program authorized on October 26, 2023, leaving $62.0 million available. The August 2023 restructuring cut headcount by 10% and produced $7.9 million in charges over the first nine months, split between $4.3 million of severance and $3.6 million of stock-based compensation.
Several risks deserve attention. The decline in net revenue retention points to pressure on renewals and expansion. Management also flagged macroeconomic uncertainty, the ability to retain members and keep them engaged, customer acquisition and retention, and security breaches or unauthorized access to member data. The Tax Cuts and Jobs Act requirement to capitalize and amortize research and development expenditures is expected to reduce cash flows from operating activities by about $12.2 million in the fiscal year ending March 31, 2024, and the company said it cannot estimate the effect in future periods. Competition for physician attention and pharmaceutical marketing budgets remains intense.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $135.3M | $113.6M | +19.1% | $115.3M | +17.4% |
| Gross profit | $123.1M | $100.9M | +22.1% | $101.7M | +21.0% |
| Gross margin | 91.0% | 88.8% | +2.2 pp | 88.3% | +2.7 pp |
| Research & development | $19.9M | $20.0M | -0.1% | $20.5M | -2.8% |
| Sales & marketing | $35.0M | $30.2M | +15.7% | $33.2M | +5.2% |
| General & administrative | $9.6M | $9.0M | +7.5% | $9.5M | +1.3% |
| Total operating expenses | $64.5M | $67.1M | -3.8% | $63.3M | +2.0% |
| Operating income (loss) | $58.6M | $33.8M | +73.3% | $38.5M | +52.1% |
| Operating margin | 43.3% | 29.7% | +13.5 pp | 33.4% | +9.9 pp |
| Net income (loss) | $48.0M | $30.6M | +56.7% | $33.5M | +43.3% |
| Net margin | 35.5% | 26.9% | +8.5 pp | 29.0% | +6.4 pp |
| Diluted EPS | $0.24 | $0.15 | +$0.09 | $0.16 | +$0.08 |
Risks
The Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures and requires taxpayers to capitalize and amortize them over five or fifteen years. Doximity states that if the requirement is not modified, cash flows from operating activities are expected to be reduced by approximately $12.2 million in the fiscal year ended March 31, 2024, and may reduce cash flows in future periods.
Customers with at least $100,000 of trailing 12-month subscription revenue accounted for approximately 89% of revenue for the trailing 12 months ended December 31, 2023. The number of these customers was 289 at December 31, 2023 compared with 282 at December 31, 2022, leaving revenue highly dependent on a limited set of large customers.
Net revenue retention rate was 115% at December 31, 2023 compared with 119% at December 31, 2022. Doximity notes this metric reflects customer renewals, expansion, contraction, and churn and is tied to its revenue growth rate, so a lower rate may pressure future growth.
Deferred revenue, current portion, was down 4.3% year over year to $66.69 million at December 31, 2023. The nine-month operating cash flow decline was driven in part by a $38.6 million decrease in deferred revenue due to the timing of customer billings and program launches, indicating less predictable billings and revenue conversion.
Operating cash flow for the nine months ended December 31, 2023 was down 9.6% to $120.15 million from $132.96 million in the prior-year period, and free cash flow was $115.985 million compared with $127.805 million in the prior-year period. The decline was partly driven by a $38.6 million decrease in deferred revenue.
SaaS KPIs
All quarters →Adjusted EBITDA Margin
Free Cash Flow
Adjusted EBITDA
Non-GAAP Net Income Margin
Non-GAAP Net Income
Non-GAAP gross margin
Summary, forecast, risks and KPIs are extracted from Doximity, Inc.'s SEC filings for Q3 FY2024 (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.