Doximity: Q1 Revenue, Net Income Increases

Key points

• Revenue of $126.7 million beat management’s expectations.
• Adjusted EBITDA of $65.9 million was significantly above guidance.
• Annual guidance for revenue and adjusted EBITDA ranges increased.

Doximity (DOC -1.83%)a leading digital platform for healthcare professionals in the US, released impressive results for the first quarter of fiscal year 2025 on August 8. Revenue for the quarter came in at $126.7 million, beating management’s guidance of $119.5 million to $120.5 million. Adjusted EBITDA also beat expectations, coming in at $65.9 million versus a range of $55-56 million. The company showed robust year-over-year growth and improved profitability despite some areas of concern such as reduced cash flow.

Understanding Doximity

Doximity is a leading digital platform for healthcare professionals in the US with over two million registered members. This includes more than 80% of US physicians, 60% of nurses and nurse practitioners, and 90% of graduating medical students. The platform offers a comprehensive suite of productivity-enhancing tools such as telehealth and messaging services and AI-powered workflow tools.

Recently, Doximity has focused on increasing user engagement and expanding its offerings. It uses artificial intelligence to deliver personalized experiences and aims to enhance its diverse product suite to meet the evolving needs of healthcare professionals and customers.

Quarterly highlights

Doximity reported revenue of $126.7 million for the quarter, a 17% increase from $108.5 million in the same period last year. The company’s net income rose to $41.4 million, up 46 percent from $28.4 million a year earlier. Non-GAAP net income also rose 37.7% from $40.6 million to $55.9 million, with margins expanding to 44.1% from 37.5%.

Gross profit rose from $95.3 million to $113.1 million, with gross margins reaching 89.3%, up from 87.9%. Non-GAAP gross profit was $116 million, with a margin of 91.6%, reflecting effective cost management. Diluted EPS increased from $0.13 to $0.21, while non-GAAP EPS increased from $0.19 to $0.28.

Operating cash flow fell 28%, falling from $57.2 million to $41.2 million. Free cash flow also fell 29% from $55.6 million to $39.5 million. This reduction suggests a possible increase in operating expenses or capital expenditures, an area that deserves attention despite strong revenue growth.

Doximity continues to grow its user base, with 590,000 unique providers using its AI, telehealth, messaging and workflow tools during the quarter. This increase in active users signals increased adoption and engagement, a crucial factor for the platform’s sustained success. The company also maintains a comprehensive suite of marketing, employment and productivity solutions, thereby diversifying its revenue streams.

In terms of data and AI capabilities, Doximity’s integration of AI for personalized and efficient platform experiences remains a cornerstone of its strategy. This not only drives user engagement, but also helps Doximity stay competitive in the medical technology industry. The company’s trusted and physician-first approach, emphasizing HIPAA-compliant and verified interactions, ensures continued user trust and engagement.

Looking ahead

For the full fiscal year 2025, Doximity updated its revenue guidance to a range of $514 million to $523 million, up from $506 million previously to $518 million. Adjusted EBITDA guidance was also raised, now expected to be between $248.5 million and $257.5 million, reflecting management’s confidence in continued growth and operational performance.

Investors should watch how Doximity manages its investments, especially in terms of AI advancements and operational expenses. The company’s ability to sustain its high rate of user engagement and adoption will be critical. Competitive pressures in the broader health technology market are another area to monitor, along with any changes in healthcare policies that could affect the company’s services and profitability.