Doximity announces fiscal 2023 third quarter financial results
San francisco--(business wire)--doximity, inc. (nyse: docs), the leading digital platform for u.s. medical professionals, today announced results for the fiscal 2023 third quarter ended december 31, 2022. “our clinical workflow tools saw record use last quarter, including our telehealth platform which served 375,000 unique active clinicians,” said jeff tangney, co-founder and ceo at doximity. “we’re proud to help more physicians be more mobile and more productive than ever before.” fiscal 2023 third quarter financial highlights all comparisons, unless otherwise noted, are to the three months ended december 31, 2021. revenue: revenue of $115.3 million, versus $97.9 million, an increase of 18% year-over-year. net income and non-gaap net income: net income of $33.5 million, versus $55.6 million, representing a margin of 29.0%, versus 56.9%. non-gaap net income of $45.8 million, versus $63.6 million, representing a margin of 39.7%, versus 65.0%. adjusted ebitda: adjusted ebitda of $55.5 million, versus $47.0 million, an increase of 18% year-over-year, representing adjusted ebitda margins of 48.2%, versus 48.0%. net income per share and non-gaap net income per share: diluted net income per share was $0.16, versus $0.26, while non-gaap diluted net income per share was $0.22, versus $0.29. operating cash flow and free cash flow: operating cash flow of $48.7 million, versus $27.3 million, an increase of 78% year-over-year, and free cash flow of $47.5 million, versus $25.6 million, an increase of 85% year-over-year. financial outlook doximity is providing guidance for its fiscal fourth quarter ending march 31, 2023 as follows: revenue between $109.6 million and $110.6 million. adjusted ebitda between $45.2 million and $46.2 million. doximity is adjusting its guidance for its fiscal year ending march 31, 2023 as follows: revenue between $417.7 million and $418.7 million. adjusted ebitda between $180.2 million and $181.2 million. doximity is providing preliminary guidance for its fiscal year ending march 31, 2024 as follows: revenue of greater than $500 million. adjusted ebitda margin of 43% or greater. 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 the covid-19 pandemic (including the impact to our industry or on our customers’ industries, impact on general economic conditions, and government responses, restrictions, and actions related to the pandemic); (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 the annual report on form 10-k that was filed with the sec on may 27, 2022. additional information will be provided in our quarterly report on form 10-q for the quarterly period ended december 31, 2022. 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. condensed consolidated balance sheets (in thousands) (unaudited) december 31, 2022 march 31, 2022 assets current assets: cash and cash equivalents $ 136,454 $ 112,809 marketable securities 664,511 685,304 accounts receivable, net 74,862 81,073 prepaid expenses and other current assets 17,120 19,439 deferred contract costs, current 5,572 5,512 total current assets 898,519 904,137 property and equipment, net 11,519 8,488 deferred income tax assets 40,338 48,558 operating lease right-of-use assets 14,357 1,087 intangible assets, net 33,034 7,909 goodwill 67,940 18,915 other assets 1,380 2,263 total assets $ 1,067,087 $ 991,357 liabilities and stockholders’ equity current liabilities: accounts payable $ 1,604 $ 463 accrued expenses and other current liabilities 33,151 25,270 deferred revenue, current 69,671 84,907 operating lease liabilities, current 1,458 642 total current liabilities 105,884 111,282 deferred revenue, non-current 140 78 operating lease liabilities, non-current 14,181 447 contingent earn-out consideration liability, non-current 15,625 — other liabilities, non-current 1,083 956 total liabilities 136,913 112,763 stockholders' equity preferred stock — — common stock 193 192 additional paid-in capital 745,506 702,589 accumulated other comprehensive loss (18,742 ) (15,294 ) retained earnings 203,217 191,107 total stockholders' equity 930,174 878,594 total liabilities and stockholders’ equity $ 1,067,087 $ 991,357 doximity, inc. condensed consolidated statements of operations (in thousands, except per share data) (unaudited) three months ended december 31, nine months ended december 31, 2022 2021 2022 2021 revenue $ 115,262 $ 97,876 $ 308,086 $ 249,895 cost of revenue(1) 13,526 11,085 39,813 28,022 gross profit 101,736 86,791 268,273 221,873 operating expenses(1): research and development 20,519 16,225 58,645 44,926 sales and marketing 33,220 25,698 90,375 66,230 general and administrative 9,513 9,079 26,986 25,102 total operating expenses 63,252 51,002 176,006 136,258 income from operations 38,484 35,789 92,267 85,615 other income, net 2,461 20 4,173 485 income before income taxes 40,945 35,809 96,440 86,100 provision for (benefit from) income taxes 7,477 (19,838 ) 14,290 (31,957 ) net income $ 33,468 $ 55,647 $ 82,150 $ 118,057 undistributed earnings attributable to participating securities — — — (21,866 ) net income attributable to class a and class b common stockholders, basic and diluted $ 33,468 $ 55,647 $ 82,150 $ 96,191 net income per share attributable to class a and class b common stockholders: basic $ 0.17 $ 0.30 $ 0.43 $ 0.62 diluted $ 0.16 $ 0.26 $ 0.38 $ 0.53 weighted-average shares used in computing net income per share attributable to class a and class b common stockholders: basic 192,805 188,372 192,963 154,289 diluted 212,065 216,396 213,656 182,905 (1) costs and expenses include stock-based compensation expense as follows (in thousands): three months ended december 31, nine months ended december 31, 2022 2021 2022 2021 cost of revenue $ 2,695 $ 1,912 $ 7,209 $ 2,973 research and development 4,002 2,035 9,416 4,864 sales and marketing 4,856 2,681 11,912 5,575 general and administrative 2,431 3,206 6,306 8,221 total stock-based compensation expense $ 13,984 $ 9,834 $ 34,843 $ 21,633 doximity, inc. condensed consolidated statements of cash flows (in thousands) (unaudited) three months ended december 31, nine months ended december 31, 2022 2021 2022 2021 cash flows from operating activities net income $ 33,468 $ 55,647 $ 82,150 $ 118,057 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 2,616 1,361 7,575 3,672 deferred income taxes 9,287 (31,972 ) 9,392 (31,972 ) stock-based compensation, net of amounts capitalized 13,984 9,834 34,843 21,633 non-cash lease expense 538 288 1,490 857 amortization of premium on marketable securities, net 471 1,302 3,144 2,863 loss on sale of marketable securities 593 595 1,093 525 amortization of deferred contract costs 1,518 1,710 6,357 7,366 other 790 (73 ) 797 120 changes in operating assets and liabilities, net of effect of acquisition: accounts receivable 3,997 (14,021 ) 6,191 (19,579 ) prepaid expenses and other assets (1,727 ) 10,722 1,924 (7,003 ) deferred contract costs (4,067 ) (3,697 ) (6,409 ) (6,672 ) accounts payable, accrued expenses and other liabilities 7,197 8,872 2,723 8,093 deferred revenue (19,970 ) (13,111 ) (18,098 ) (17,538 ) operating lease liabilities 2 (173 ) (209 ) (811 ) net cash provided by operating activities 48,697 27,284 132,963 79,611 cash flows from investing activities cash paid for acquisition — — (53,500 ) — purchases of property and equipment (204 ) (611 ) (1,680 ) (852 ) internal-use software development costs (1,012 ) (1,065 ) (3,478 ) (2,736 ) purchases of marketable securities (39,080 ) (115,772 ) (130,257 ) (1,271,915 ) maturities of marketable securities 10,576 6,066 35,014 41,617 sales of marketable securities 43,024 85,862 107,182 616,938 net cash provided by (used in) investing activities 13,304 (25,520 ) (46,719 ) (616,948 ) cash flows from financing activities proceeds from issuance of common stock upon initial public offering after deducting underwriting discounts and commissions — — — 553,905 proceeds from issuance of common stock upon exercise of stock options and common stock warrants 1,871 4,174 7,455 9,234 proceeds from issuance of common stock in connection with the employee stock purchase plan — — 2,341 — taxes paid related to net share settlement of equity awards (1,092 ) (380 ) (2,353 ) (436 ) repurchase of common stock — — (70,042 ) (2,698 ) payments of deferred offering costs — — — (3,982 ) net cash provided by (used in) financing activities 779 3,794 (62,599 ) 556,023 net increase in cash and cash equivalents 62,780 5,558 23,645 18,686 cash and cash equivalents, beginning of period 73,674 79,521 112,809 66,393 cash and cash equivalents, end of period $ 136,454 $ 85,079 $ 136,454 $ 85,079 non-gaap financial measures to supplement our condensed 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 condensed 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 metrics1 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. 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. 1 the metric excludes the impact of the amion acquisition, which closed on april 1, 2022, including customers of, and subscription revenue generated from, the amion on-call scheduling and messaging application and was immaterial to the periods presented. 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 december 31, nine months ended december 31, 2022 2021 2022 2021 (unaudited) (in thousands, except percentages) net income $ 33,468 $ 55,647 $ 82,150 $ 118,057 adjusted to exclude the following: acquisition and other related expenses — — 30 — stock-based compensation 13,984 9,834 34,843 21,633 depreciation and amortization 2,616 1,361 7,575 3,672 provision for (benefit from) income taxes 7,477 (19,838 ) 14,290 (31,957 ) change in fair value of contingent earn-out consideration liability 417 — 323 — other income, net (2,461 ) (20 ) (4,173 ) (485 ) adjusted ebitda $ 55,501 $ 46,984 $ 135,038 $ 110,920 revenue $ 115,262 $ 97,876 $ 308,086 $ 249,895 net income margin 29.0 % 56.9 % 26.7 % 47.2 % adjusted ebitda margin 48.2 % 48.0 % 43.8 % 44.4 % three months ended december 31, nine months ended december 31, 2022 2021 2022 2021 (unaudited) (in thousands) net cash provided by operating activities $ 48,697 $ 27,284 $ 132,963 $ 79,611 purchases of property and equipment (204 ) (611 ) (1,680 ) (852 ) internal-use software development costs (1,012 ) (1,065 ) (3,478 ) (2,736 ) free cash flow $ 47,481 $ 25,608 $ 127,805 $ 76,023 other cash flow components: net cash provided by (used in) investing activities $ 13,304 $ (25,520 ) $ (46,719 ) $ (616,948 ) net cash provided by (used in) financing activities $ 779 $ 3,794 $ (62,599 ) $ 556,023 three months ended december 31, nine months ended december 31, 2022 2021 2022 2021 (unaudited) (in thousands, except per share data and percentages) gaap cost of revenue $ 13,526 $ 11,085 $ 39,813 $ 28,022 adjusted to exclude the following: stock-based compensation (2,695 ) (1,912 ) (7,209 ) (2,973 ) amortization of acquired intangibles (137 ) — (410 ) — non-gaap cost of revenue $ 10,694 $ 9,173 $ 32,194 $ 25,049 gaap gross profit $ 101,736 $ 86,791 $ 268,273 $ 221,873 adjusted to exclude the following: stock-based compensation 2,695 1,912 7,209 2,973 amortization of acquired intangibles 137 — 410 — non-gaap gross profit $ 104,568 $ 88,703 $ 275,892 $ 224,846 gaap gross margin 88.3 % 88.7 % 87.1 % 88.8 % non-gaap gross margin 90.7 % 90.6 % 89.6 % 90.0 % gaap research and development expense $ 20,519 $ 16,225 $ 58,645 $ 44,926 adjusted to exclude the following: stock-based compensation (4,002 ) (2,035 ) (9,416 ) (4,864 ) non-gaap research and development expense $ 16,517 $ 14,190 $ 49,229 $ 40,062 gaap sales and marketing expense $ 33,220 $ 25,698 $ 90,375 $ 66,230 adjusted to exclude the following: stock-based compensation (4,856 ) (2,681 ) (11,912 ) (5,575 ) amortization of acquired intangibles (1,061 ) (265 ) (3,185 ) (795 ) change in fair value of contingent earn-out consideration liability (417 ) — (323 ) — non-gaap sales and marketing expense $ 26,886 $ 22,752 $ 74,955 $ 59,860 gaap general and administrative expense $ 9,513 $ 9,079 $ 26,986 $ 25,102 adjusted to exclude the following: acquisition and other related expenses — — (30 ) — stock-based compensation (2,431 ) (3,206 ) (6,306 ) (8,221 ) non-gaap general and administrative expense $ 7,082 $ 5,873 $ 20,650 $ 16,881 gaap operating expense $ 63,252 $ 51,002 $ 176,006 $ 136,258 adjusted to exclude the following: acquisition and other related expenses — — (30 ) — stock-based compensation (11,289 ) (7,922 ) (27,634 ) (18,660 ) amortization of acquired intangibles (1,061 ) (265 ) (3,185 ) (795 ) change in fair value of contingent earn-out consideration liability (417 ) — (323 ) — non-gaap operating expense $ 50,485 $ 42,815 $ 144,834 $ 116,803 gaap operating income $ 38,484 $ 35,789 $ 92,267 $ 85,615 adjusted to exclude the following: acquisition and other related expenses — — 30 — stock-based compensation 13,984 9,834 34,843 21,633 amortization of acquired intangibles 1,198 265 3,595 795 change in fair value of contingent earn-out consideration liability 417 — 323 — non-gaap operating income $ 54,083 $ 45,888 $ 131,058 $ 108,043 gaap net income $ 33,468 $ 55,647 $ 82,150 $ 118,057 adjusted to exclude the following: acquisition and other related expenses — — 30 — stock-based compensation 13,984 9,834 34,843 21,633 amortization of acquired intangibles 1,198 265 3,595 795 change in fair value of contingent earn-out consideration liability 417 — 323 — income tax effect of non-gaap adjustments (1) (3,276 ) (2,121 ) (8,146 ) (4,710 ) non-gaap net income $ 45,791 $ 63,625 $ 112,795 $ 135,775 non-gaap net income margin 39.7 % 65.0 % 36.6 % 54.3 % gaap undistributed earnings attributable to participating securities $ — $ — $ — $ (21,866 ) impact on undistributed earnings attributable to participating securities due to non-gaap adjustments — — — (2,436 ) non-gaap undistributed earnings attributable to participating securities $ — $ — $ — $ (24,302 ) non-gaap net income $ 45,791 $ 63,625 $ 112,795 $ 135,775 non-gaap undistributed earnings attributable to participating securities — — — (24,302 ) non-gaap net income attributable to class a and class b stockholders, basic and diluted $ 45,791 $ 63,625 $ 112,795 $ 111,473 weighted-average shares used in computing net income per share attributable to class a and class b common stockholders: basic 192,805 188,372 192,963 154,289 diluted 212,065 216,396 213,656 182,905 non-gaap net income per share attributable to class a and class b stockholders: basic $ 0.24 $ 0.34 $ 0.58 $ 0.72 diluted $ 0.22 $ 0.29 $ 0.53 $ 0.61 (1) for the three and nine months ended december 31, 2022 and 2021, management used an estimated annual effective non-gaap tax rate of 21.0%.
