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Doximity Announces Fiscal 2024 First Quarter Financial Results

Total revenues of $108.5 million, up 20% year-over-year

Operating cash flow of $57.2 million, up 28% year-over-year

Free cash flow of $55.6 million, up 31% year-over-year

Doximity, Inc. (NYSE: DOCS), the leading digital platform for U.S. medical professionals, today announced results of its fiscal 2024 first quarter ended June 30, 2023.

“We’re pleased to report another quarter of record engagement across our entire platform, with over 525,000 unique providers using our workflow tools in Q1,” said Jeff Tangney, co-founder and CEO at Doximity. “Looking ahead, we are focused on streamlining our client workflows, so we can fully capitalize on our long-term potential.”

Fiscal 2024 First Quarter Financial Highlights

All comparisons, unless otherwise noted, are to the three months ended June 30, 2022.

  • Revenue: Revenue of $108.5 million, versus $90.6 million, an increase of 20% year-over-year.
  • Net income and non-GAAP net income: Net income of $28.4 million, versus $22.4 million, representing a margin of 26.2%, versus 24.7%. Non-GAAP net income of $40.6 million, versus $30.8 million, representing a margin of 37.5%, versus 34.0%.
  • Adjusted EBITDA: Adjusted EBITDA of $46.6 million, versus $33.5 million, an increase of 39% year-over-year, representing adjusted EBITDA margins of 42.9%, versus 37.0%.
  • Diluted net income per share and non-GAAP diluted net income per share: Diluted net income per share was $0.13, versus $0.10, while non-GAAP diluted net income per share was $0.19, versus $0.14.
  • Operating cash flow and free cash flow: Operating cash flow of $57.2 million, versus $44.8 million, an increase of 28% year-over-year, and free cash flow of $55.6 million, versus $42.6 million, an increase of 31% year-over-year.

Financial Outlook

Doximity is providing guidance for its fiscal second quarter ending September 30, 2023 as follows:

  • Revenue between $108.5 million and $109.5 million.
  • Adjusted EBITDA between $44 million and $45 million.

Doximity is revising guidance for its fiscal year ending March 31, 2024 as follows:

  • Revenue between $452 million and $468 million.
  • Adjusted EBITDA between $193 million and $209 million.

Workforce Reduction

On August 8, 2023, Doximity announced a plan to reduce its current workforce by approximately 100 employees, representing 10% of its workforce, to simplify its operations and better align its resources with its priorities. The Company expects the restructuring charge to be $8 - 10 million, the majority of which will be incurred in the second quarter of fiscal year 2024, and that the reduction in force will be substantially complete by the third quarter of fiscal year 2024.

Conference Call Information

Doximity will host a webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss these financial results. To listen to a live audio webcast, please visit the Company’s Investor Relations page at https://investors.doximity.com. The archived webcast will be available on the Company’s Investor Relations page shortly after the call.

About Doximity

Founded in 2010, Doximity is the leading digital platform for U.S. medical professionals. The Company's network members include over 80% of U.S. physicians across all specialties and practice areas. Doximity provides its verified clinical membership with digital tools built for medicine, enabling them to collaborate with colleagues, stay up to date with the latest medical news and research, manage their careers and on-call schedules, and conduct virtual patient visits. Doximity's mission is to help doctors be more productive so they can provide better care for their patients. For more information, visit www.doximity.com.

Forward-Looking Statements

Statements we make in this press release may include statements which are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, which are usually identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “seeks,” “should,” “will,” and variations of such words or similar expressions. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are making this statement for purposes of complying with those safe harbor provisions. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations, or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including (i) the timing and scope of anticipated stock repurchases; (ii) the impact of uncertainty in the current economic environment and macroeconomic uncertainty, including the resurgence or resolution of the COVID-19 pandemic or other pandemics, epidemics or infectious diseases; (iii) our ability to retain existing members or add new members to our platform and maintain or grow their engagement with our platform; (iv) our ability to attract new customers or retain existing customers; (v) the impact of our prioritization of our members’ interests; (vi) breaches in our security measures or unauthorized access to members’ data; (vii) our ability to maintain or manage our growth, and other risks and factors that are beyond our control including, without limitation, those set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 and as may be updated in any subsequent Quarterly Reports on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements. The forward-looking statements made in this press release relate only to management’s beliefs and assumptions as of this date. We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

DOXIMITY, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

June 30, 2023

 

March 31, 2023

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

306,729

 

 

$

158,027

 

Marketable securities

 

566,444

 

 

 

682,972

 

Accounts receivable, net

 

92,922

 

 

 

107,047

 

Prepaid expenses and other current assets

 

19,832

 

 

 

22,289

 

Deferred contract costs, current

 

3,729

 

 

 

5,118

 

Total current assets

 

989,656

 

 

 

975,453

 

Property and equipment, net

 

11,639

 

 

 

11,279

 

Deferred income tax assets

 

38,895

 

 

 

34,907

 

Operating lease right-of-use assets

 

13,282

 

 

 

13,819

 

Intangible assets, net

 

30,638

 

 

 

31,836

 

Goodwill

 

67,940

 

 

 

67,940

 

Other assets

 

1,459

 

 

 

1,654

 

Total assets

$

1,153,509

 

 

$

1,136,888

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

582

 

 

$

1,272

 

Accrued expenses and other current liabilities

 

31,741

 

 

 

31,245

 

Deferred revenue, current

 

98,323

 

 

 

105,238

 

Operating lease liabilities, current

 

2,048

 

 

 

1,752

 

Total current liabilities

 

132,694

 

 

 

139,507

 

Deferred revenue, non-current

 

191

 

 

 

198

 

Operating lease liabilities, non-current

 

13,585

 

 

 

13,885

 

Contingent earn-out consideration liability, non-current

 

10,454

 

 

 

15,942

 

Other liabilities, non-current

 

5,798

 

 

 

1,240

 

Total liabilities

 

162,722

 

 

 

170,772

 

Stockholders' Equity

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

195

 

 

 

194

 

Additional paid-in capital

 

777,772

 

 

 

762,150

 

Accumulated other comprehensive loss

 

(12,336

)

 

 

(14,083

)

Retained earnings

 

225,156

 

 

 

217,855

 

Total stockholders' equity

 

990,787

 

 

 

966,116

 

Total liabilities and stockholders’ equity

$

1,153,509

 

 

$

1,136,888

 

 

DOXIMITY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended June 30,

 

2023

 

2022

Revenue

$ 108,469

 

$ 90,639

Cost of revenue(1)

13,153

 

13,077

Gross profit

95,316

 

77,562

Operating expenses(1):

 

 

 

Research and development

21,931

 

19,022

Sales and marketing

34,455

 

28,134

General and administrative

9,247

 

8,724

Total operating expenses

65,633

 

55,880

Income from operations

29,683

 

21,682

Other income, net

4,839

 

804

Income before income taxes

34,522

 

22,486

Provision for income taxes

6,116

 

103

Net income

$ 28,406

 

$ 22,383

Net income per share attributable to Class A and Class B common stockholders:

 

 

 

Basic

$ 0.15

 

$ 0.12

Diluted

$ 0.13

 

$ 0.10

Weighted-average shares used in computing net income per share attributable to Class A and Class B common stockholders:

 

 

 

Basic

194,521

 

192,947

Diluted

212,355

 

214,954

 

(1) Costs and expenses include stock-based compensation expense as follows (in thousands):

 

Three Months Ended June 30,

 

2023

 

 

 

2022

Cost of revenue

$ 2,461

 

$ 2,122

Research and development

3,256

 

2,552

Sales and marketing

5,995

 

3,074

General and administrative

2,289

 

1,758

Total stock-based compensation expense

$ 14,001

 

$ 9,506

 

DOXIMITY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Three Months Ended June 30,

 

 

2023

 

 

 

2022

 

Cash flows from operating activities

 

 

 

Net income

$

28,406

 

 

$

22,383

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

2,604

 

 

 

2,370

 

Deferred income taxes

 

 

 

 

105

 

Stock-based compensation, net of amounts capitalized

 

14,001

 

 

 

9,506

 

Non-cash lease expense

 

537

 

 

 

401

 

Amortization of premium (accretion of discount) on marketable securities, net

 

(299

)

 

 

1,455

 

Loss on sale of marketable securities

 

273

 

 

 

37

 

Amortization of deferred contract costs

 

2,667

 

 

 

2,767

 

Other

 

(152

)

 

 

(30

)

Changes in operating assets and liabilities, net of effect of acquisition:

 

 

 

Accounts receivable

 

14,032

 

 

 

5,533

 

Prepaid expenses and other assets

 

2,589

 

 

 

1,246

 

Deferred contract costs

 

(1,210

)

 

 

(866

)

Accounts payable, accrued expenses and other liabilities

 

677

 

 

 

(6,109

)

Deferred revenue

 

(6,922

)

 

 

6,152

 

Operating lease liabilities

 

(3

)

 

 

(198

)

Net cash provided by operating activities

 

57,200

 

 

 

44,752

 

Cash flows from investing activities

 

 

 

Cash paid for acquisition

 

 

 

 

(53,500

)

Purchases of property and equipment

 

(70

)

 

 

(710

)

Internal-use software development costs

 

(1,494

)

 

 

(1,415

)

Purchases of marketable securities

 

(35,284

)

 

 

(8,870

)

Maturities of marketable securities

 

116,649

 

 

 

8,271

 

Sales of marketable securities

 

37,525

 

 

 

14,724

 

Net cash provided by (used in) investing activities

 

117,326

 

 

 

(41,500

)

Cash flows from financing activities

 

 

 

Proceeds from issuance of common stock upon exercise of stock options and common stock warrants

 

3,285

 

 

 

3,014

 

Taxes paid related to net share settlement of equity awards

 

(1,964

)

 

 

(109

)

Repurchase of common stock

 

(21,755

)

 

 

(8,874

)

Payment of contingent consideration related to a business combination

 

(5,390

)

 

 

 

Net cash used in financing activities

 

(25,824

)

 

 

(5,969

)

Net increase (decrease) in cash and cash equivalents

 

148,702

 

 

 

(2,717

)

Cash and cash equivalents, beginning of period

 

158,027

 

 

 

112,809

 

Cash and cash equivalents, end of period

$

306,729

 

 

$

110,092

 

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company uses the following non-GAAP measures of financial performance:

  • Non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP net income margin, and non-GAAP basic and diluted net income per common share: We exclude the effect of stock-based compensation expense, amortization of acquired intangible assets, change in fair value of contingent earn-out consideration liability, and expenses associated with acquisitions from non-GAAP gross profit, non-GAAP gross margin and non-GAAP operating income. Non-GAAP net income and non-GAAP net income margin are further adjusted for estimated income tax on such adjustments. We calculate income taxes on the adjustments by applying an estimated annual effective tax rate to the adjustments. Non-GAAP basic and diluted net income per common share is non-GAAP net income attributable to common stockholders divided by the weighted average number of shares. For both basic and diluted non-GAAP net income per share, the weighted average shares we use in computing non-GAAP net income per share is equal to our GAAP weighted average shares. Non-GAAP gross margin represents non-GAAP gross profit as a percentage of revenue and non-GAAP net income margin represents non-GAAP net income as a percentage of revenue.
  • Adjusted EBITDA and adjusted EBITDA margin: We define adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization, and as further adjusted for acquisition and other related expenses, stock-based compensation expense, change in fair value of contingent earn-out consideration liability, and other income, net. Net income margin represents net income as a percentage of revenue and adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue.
  • Free cash flow: We calculate free cash flow as cash flow from operating activities less purchases of property and equipment and internal-use software development costs.

We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP to non-GAAP results.

Key Business Metrics

  • Net revenue retention rate: Net revenue retention rate is calculated by taking the trailing 12-month (“TTM”) subscription-based revenue from our customers that had revenue in the prior TTM period and dividing that by the total subscription-based revenue for the prior TTM period. For the purposes of this calculation, subscription revenue excludes subscriptions for individuals and small practices and other non-recurring items. Our net revenue retention rate compares our subscription revenue from the same set of customers across comparable periods, and reflects customer renewals, expansion, contraction, and churn. Our net revenue retention rate is directly tied to our revenue growth rate and thus fluctuates as that growth rate fluctuates.
  • Customers with trailing 12-month subscription revenue greater than $100,000: The number of customers with TTM subscription revenue greater than $100,000 is a key indicator of the scale of our business, and is calculated by counting the number of customers that contributed more than $100,000 in subscription revenue in the TTM period. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity, and we present our total customer count for historical periods reflecting these adjustments.

Reconciliation of GAAP to Non-GAAP Financial Measures

The following tables reconcile the specific items excluded from GAAP metrics in the calculation of non-GAAP metrics for the periods shown below:

 

Three Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

(unaudited)

 

(in thousands, except percentages)

Net income

$

28,406

 

 

$

22,383

 

Adjusted to exclude the following:

 

 

 

Acquisition and other related expenses

 

 

 

 

30

 

Stock-based compensation

 

14,001

 

 

 

9,506

 

Depreciation and amortization

 

2,604

 

 

 

2,370

 

Provision for income taxes

 

6,116

 

 

 

103

 

Change in fair value of contingent earn-out consideration liability

 

269

 

 

 

(54

)

Other income, net

 

(4,839

)

 

 

(804

)

Adjusted EBITDA

$

46,557

 

 

$

33,534

 

 

 

 

 

Revenue

$

108,469

 

 

$

90,639

 

Net income margin

 

26.2

%

 

 

24.7

%

Adjusted EBITDA margin

 

42.9

%

 

 

37.0

%

 

Three Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

(unaudited)

 

(in thousands)

Net cash provided by operating activities

$

57,200

 

 

$

44,752

 

Purchases of property and equipment

 

(70

)

 

 

(710

)

Internal-use software development costs

 

(1,494

)

 

 

(1,415

)

Free cash flow

$

55,636

 

 

$

42,627

 

Other cash flow components:

 

 

 

Net cash provided by (used in) investing activities

$

117,326

 

 

$

(41,500

)

Net cash used in financing activities

$

(25,824

)

 

$

(5,969

)

Three Months Ended June 30,

 

 

2023

 

 

 

2022

 

 

(unaudited)

 

(in thousands, except per share data and percentages)

GAAP cost of revenue

$

13,153

 

 

$

13,077

 

Adjusted to exclude the following:

 

 

 

Stock-based compensation

 

(2,461

)

 

 

(2,122

)

Amortization of acquired intangibles

 

(137

)

 

 

(137

)

Non-GAAP cost of revenue

$

10,555

 

 

$

10,818

 

 

 

 

 

GAAP gross profit

$

95,316

 

 

$

77,562

 

Adjusted to exclude the following:

 

 

 

Stock-based compensation

 

2,461

 

 

 

2,122

 

Amortization of acquired intangibles

 

137

 

 

 

137

 

Non-GAAP gross profit

$

97,914

 

 

$

79,821

 

 

 

 

 

GAAP gross margin

 

87.9

%

 

 

85.6

%

Non-GAAP gross margin

 

90.3

%

 

 

88.1

%

 

 

 

 

GAAP research and development expense

$

21,931

 

 

$

19,022

 

Adjusted to exclude the following:

 

 

 

Stock-based compensation

 

(3,256

)

 

 

(2,552

)

Non-GAAP research and development expense

$

18,675

 

 

$

16,470

 

 

 

 

 

GAAP sales and marketing expense

$

34,455

 

 

$

28,134

 

Adjusted to exclude the following:

 

 

 

Stock-based compensation

 

(5,995

)

 

 

(3,074

)

Amortization of acquired intangibles

 

(1,061

)

 

 

(1,063

)

Change in fair value of contingent earn-out consideration liability

 

(269

)

 

 

54

 

Non-GAAP sales and marketing expense

$

27,130

 

 

$

24,051

 

 

 

 

 

GAAP general and administrative expense

$

9,247

 

 

$

8,724

 

Adjusted to exclude the following:

 

 

 

Acquisition and other related expenses

 

 

 

 

(30

)

Stock-based compensation

 

(2,289

)

 

 

(1,758

)

Non-GAAP general and administrative expense

$

6,958

 

 

$

6,936

 

 

 

 

 

GAAP operating expense

$

65,633

 

 

$

55,880

 

Adjusted to exclude the following:

 

 

 

Acquisition and other related expenses

 

 

 

 

(30

)

Stock-based compensation

 

(11,540

)

 

 

(7,384

)

Amortization of acquired intangibles

 

(1,061

)

 

 

(1,063

)

Change in fair value of contingent earn-out consideration liability

 

(269

)

 

 

54

 

Non-GAAP operating expense

$

52,763

 

 

$

47,457

 

 

 

 

 

GAAP operating income

$

29,683

 

 

$

21,682

 

Adjusted to exclude the following:

 

 

 

Acquisition and other related expenses

 

 

 

 

30

 

Stock-based compensation

 

14,001

 

 

 

9,506

 

Amortization of acquired intangibles

 

1,198

 

 

 

1,200

 

Change in fair value of contingent earn-out consideration liability

 

269

 

 

 

(54

)

Non-GAAP operating income

$

45,151

 

 

$

32,364

 

 

 

 

 

GAAP net income

$

28,406

 

 

$

22,383

 

Adjusted to exclude the following:

 

 

 

Acquisition and other related expenses

 

 

 

 

30

 

Stock-based compensation

 

14,001

 

 

 

9,506

 

Amortization of acquired intangibles

 

1,198

 

 

 

1,200

 

Change in fair value of contingent earn-out consideration liability

 

269

 

 

 

(54

)

Income tax effect of non-GAAP adjustments (1)

 

(3,248

)

 

 

(2,243

)

Non-GAAP net income

$

40,626

 

 

$

30,822

 

Non-GAAP net income margin

 

37.5

%

 

 

34.0

%

 

 

 

 

Weighted-average shares used in computing net income per share attributable to Class A and Class B common stockholders:

 

 

 

Basic

 

194,521

 

 

 

192,947

 

Diluted

 

212,355

 

 

 

214,954

 

 

 

 

 

Non-GAAP net income per share attributable to Class A and Class B stockholders:

 

 

 

Basic

$

0.21

 

 

$

0.16

 

Diluted

$

0.19

 

 

$

0.14

 

(1)

For the three months ended June 30, 2023 and 2022, management used an estimated annual effective non-GAAP tax rate of 21.0%.

 

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