Doximity Quarterly Earnings Preview

Goldman Sachs analysts initiated coverage on Doximity (NYSE:DOCS) with a Neutral rating and a price target on the stock of $58. The evaluation reflects a balanced outlook, acknowledging the company’s strong market position and growth potential while noting limited upside at current valuation levels.

Doximity operates in an attractive end-market, holding a leadership position that supports its long-term growth prospects. Goldman Sachs projected sustained industry performance of 6-7% annually, with Doximity expected to outpace the market, driving a 9-10% compound annual revenue growth rate (CAGR) from fiscal 2025 through fiscal 2028. The company’s ability to expand its core customer base and achieve its fiscal 2025 guidance, as well as outer-year revenue forecasts, was further reinforced by its strong performance in the second quarter of fiscal 2025.

In addition to revenue growth, Goldman Sachs highlighted a clear trajectory for EBITDA margin expansion. The analysts forecasted an increase of 180 basis points in margins from fiscal 2025 to fiscal 2028, reflecting operational efficiencies and strong execution. While Doximity’s fundamentals remain robust, the Neutral rating suggests that current valuation levels already account for much of its growth potential, leaving limited room for near-term upside.

On Thursday, May 16, 2024, Doximity, Inc. (NYSE:DOCS), a leading digital platform for U.S. medical professionals, reported its earnings after the market closed, revealing an earnings per share (EPS) of $0.202. This figure slightly exceeded the estimated EPS of $0.2, showcasing the company's ability to surpass market expectations. Additionally, the company's revenue reached $118.06 million, surpassing the expected $116.4 million. This performance not only highlights Doximity's financial health but also its continued growth in the competitive Zacks Medical Services industry.

Doximity's quarterly earnings of $0.25 per share exceeded the Zacks Consensus Estimate of $0.20 per share, marking a significant improvement from the $0.20 per share earned a year ago. This 25% earnings surprise continues the company's trend of surpassing consensus EPS estimates for the fourth consecutive quarter. Such consistent performance underscores Doximity's operational efficiency and its ability to exceed analyst expectations, reinforcing investor confidence in the company's financial management and growth strategy.

The company's revenue for the financial quarter ending March 2024 was $118.06 million, which not only surpassed the Zacks Consensus Estimate by 1.37% but also showed growth from the $110.97 million reported in the same period the previous year. This marks the fourth consecutive quarter that Doximity has exceeded consensus revenue estimates, demonstrating the company's strong market position and its ability to generate increased revenue streams. This growth is attributed to the company's innovative approach to integrating AI and automation into clinical workflows, which has attracted over 580,000 unique providers to utilize their tools in the last quarter.

Jeff Tangney, co-founder and CEO of Doximity, expressed satisfaction with the company's performance, highlighting strong profits and record engagement. The company's subscription revenue, a significant part of their income, rose by 9% year-over-year to $112.7 million from $103.2 million. Additionally, Doximity reported a net income of $40.6 million, up from $30.7 million in the prior year, marking a net margin increase to 34.4% from 27.6%. These financial highlights not only underscore Doximity's continued growth but also its successful efforts to enhance clinical workflows through technology.

Doximity's financial metrics, such as the price-to-earnings (P/E) ratio of approximately 30.04 and the price-to-sales (P/S) ratio of about 9.32, reflect the value investors place on the company's earnings and sales, respectively. The enterprise value to sales (EV/Sales) ratio of roughly 9.14 and the enterprise value to operating cash flow (EV/OCF) ratio of approximately 23.61 further indicate the company's valuation in relation to its sales and operating cash flow. With a minimal debt-to-equity (D/E) ratio of about 0.016 and a current ratio standing impressively at 6.20, Doximity showcases its financial stability and ability to cover its short-term liabilities with its short-term assets, positioning itself as a strong contender in the healthcare technology sector.

Despite surpassing analyst expectations for its Q1 results, Doximity’s (NYSE:DOCS) revised guidance downwards led to a more than 22% decline in its shares intra-day today.

For the first fiscal quarter, Doximity reported a profit of 19 cents per share, which came in above the expected 14 cents. The company's revenue grew by 20% year-over-year to $108.5 million, which exceeded the Street estimate of $107 million.

However, for the upcoming quarter, the company's revenue guidance stands at $109 million, falling short of the anticipated $121.3 million. Additionally, for 2024, Doximity has reduced its revenue outlook from the initial $503 million to now $460 million.

In another significant move, the company disclosed its intention to trim its current workforce, with plans to lay off around 100 employees, representing roughly 10% of its total workforce.