Doximity announces fiscal 2023 second 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 second quarter ended september 30, 2022. “we were pleased to beat on both our top and bottom lines while delivering our first nine-figure revenue quarter,” said jeff tangney, co-founder and ceo at doximity. "our telehealth platform grew to a record 370,000 quarterly active clinicians. we will continue to invest in building tools to help physicians save time, so they can provide better care for their patients.” fiscal 2023 second quarter financial highlights all comparisons, unless otherwise noted, are to the three months ended september 30, 2021. revenue: revenue of $102.2 million, versus $79.4 million, an increase of 29% year-over-year. net income and non-gaap net income: net income of $26.3 million, versus $36.1 million, representing a margin of 26%, versus 45%. non-gaap net income of $36.2 million, versus $41.6 million, representing a margin of 35%, versus 52%. adjusted ebitda: adjusted ebitda of $46.0 million, versus $32.8 million, an increase of 40% year-over-year, representing adjusted ebitda margins of 45%, versus 41%. net income per share and non-gaap net income per share: diluted net income per share was $0.12, versus $0.17, while non-gaap diluted net income per share was $0.17, versus $0.19. operating cash flow and free cash flow: operating cash flow of $39.5 million, versus $19.2 million, and free cash flow of $37.7 million, versus $18.1 million. financial outlook doximity is providing guidance for its fiscal third quarter ending december 31, 2022 as follows: revenue between $110.7 million and $111.7 million. revenue between $110.7 million and $111.7 million. adjusted ebitda between $47.7 million and $48.7 million. adjusted ebitda between $47.7 million and $48.7 million. doximity is reiterating its guidance for its fiscal year ending march 31, 2023 as follows: revenue between $424.0 million and $432.0 million. adjusted ebitda between $178.0 million and $186.0 million. stock repurchase program the board of directors of doximity authorized another program to repurchase up to $70 million of the company’s class a common stock. the repurchases are expected to be executed from time to time over the next 12 months, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through rule 10b5-1 plans. 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 september 30, 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) september 30, 2022 march 31, 2022 assets current assets: cash and cash equivalents $ 73,674 $ 112,809 marketable securities 676,317 685,304 accounts receivable, net 79,236 81,073 prepaid expenses and other current assets 15,691 19,439 deferred contract costs, current 2,999 5,512 total current assets 847,917 904,137 property and equipment, net 11,647 8,488 deferred income tax assets 50,583 48,558 operating lease right-of-use assets 14,894 1,087 intangible assets, net 34,232 7,909 goodwill 67,940 18,915 other assets 1,130 2,263 total assets $ 1,028,343 $ 991,357 liabilities and stockholders’ equity current liabilities: accounts payable $ 1,106 $ 463 accrued expenses and other current liabilities 26,408 25,270 deferred revenue, current 89,616 84,907 operating lease liabilities, current 1,013 642 total current liabilities 118,143 111,282 deferred revenue, non-current 166 78 operating lease liabilities, non-current 14,625 447 contingent earn-out consideration liability, non-current 15,422 — other liabilities, non-current 1,023 956 total liabilities 149,379 112,763 stockholders' equity preferred stock — — common stock 192 192 additional paid-in capital 730,582 702,589 accumulated other comprehensive loss (21,559 ) (15,294 ) retained earnings 169,749 191,107 total stockholders' equity 878,964 878,594 total liabilities and stockholders’ equity $ 1,028,343 $ 991,357 doximity, inc. condensed consolidated statements of operations (in thousands, except per share data) (unaudited) three months ended september 30, six months ended september 30, 2022 2021 2022 2021 revenue $ 102,185 $ 79,350 $ 192,824 $ 152,019 cost of revenue(1) 13,210 8,951 26,287 16,937 gross profit 88,975 70,399 166,537 135,082 operating expenses(1): research and development 19,104 15,460 38,126 28,701 sales and marketing 29,021 21,161 57,155 40,532 general and administrative 8,749 8,827 17,473 16,023 total operating expenses 56,874 45,448 112,754 85,256 income from operations 32,101 24,951 53,783 49,826 other income, net 908 420 1,712 465 income before income taxes 33,009 25,371 55,495 50,291 provision for (benefit from) income taxes 6,710 (10,717 ) 6,813 (12,119 ) net income $ 26,299 $ 36,088 $ 48,682 $ 62,410 undistributed earnings attributable to participating securities — — — (18,326 ) net income attributable to class a and class b common stockholders, basic and diluted $ 26,299 $ 36,088 $ 48,682 $ 44,084 net income per share attributable to class a and class b common stockholders: basic $ 0.14 $ 0.19 $ 0.25 $ 0.32 diluted $ 0.12 $ 0.17 $ 0.23 $ 0.27 weighted-average shares used in computing net income per share attributable to class a and class b common stockholders: basic 193,137 186,171 193,042 137,154 diluted 213,949 216,672 214,452 166,066 (1) costs and expenses include stock-based compensation expense as follows: three months ended september 30, six months ended september 30, 2022 2021 2022 2021 cost of revenue $ 2,392 $ 793 $ 4,514 $ 1,061 research and development 2,862 1,859 5,414 2,829 sales and marketing 3,982 1,866 7,056 2,894 general and administrative 2,117 2,154 3,875 5,015 total stock-based compensation expense $ 11,353 $ 6,672 $ 20,859 $ 11,799 doximity, inc. condensed consolidated statements of cash flows (in thousands) (unaudited) three months ended september 30, six months ended september 30, 2022 2021 2022 2021 cash flows from operating activities net income $ 26,299 $ 36,088 $ 48,682 $ 62,410 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization 2,589 1,158 4,959 2,311 deferred income taxes — — 105 — stock-based compensation, net of amounts capitalized 11,353 6,672 20,859 11,799 non-cash lease expense 551 286 952 569 amortization of premium on marketable securities, net 1,218 1,264 2,673 1,561 loss (gain) on sale of marketable securities 463 (72 ) 500 (70 ) amortization of deferred contract costs 2,072 2,452 4,839 5,656 other 37 288 7 195 changes in operating assets and liabilities, net of effect of acquisition: accounts receivable (3,339 ) (9,978 ) 2,194 (5,556 ) prepaid expenses and other assets 2,405 (14,867 ) 3,651 (17,728 ) deferred contract costs (1,476 ) (1,483 ) (2,342 ) (2,975 ) accounts payable, accrued expenses and other liabilities 1,635 1,478 (4,474 ) (780 ) deferred revenue (4,280 ) (3,967 ) 1,872 (4,427 ) operating lease liabilities (13 ) (167 ) (211 ) (638 ) net cash provided by operating activities 39,514 19,152 84,266 52,327 cash flows from investing activities cash paid for acquisition — — (53,500 ) — purchases of property and equipment (766 ) (200 ) (1,476 ) (241 ) internal-use software development costs (1,051 ) (900 ) (2,466 ) (1,671 ) purchases of marketable securities (82,307 ) (1,088,768 ) (91,177 ) (1,156,143 ) maturities of marketable securities 16,167 24,787 24,438 35,551 sales of marketable securities 49,434 531,076 64,158 531,076 net cash used in investing activities (18,523 ) (534,005 ) (60,023 ) (591,428 ) 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 2,570 2,323 5,584 5,060 proceeds from issuance of common stock in connection with the employee stock purchase plan 2,341 — 2,341 — taxes paid related to net share settlement of equity awards (1,152 ) (56 ) (1,261 ) (56 ) repurchase of common stock (61,168 ) — (70,042 ) (2,698 ) payments of deferred offering costs — (2,214 ) — (3,982 ) net cash provided by (used in) financing activities (57,409 ) 53 (63,378 ) 552,229 net increase (decrease) in cash and cash equivalents (36,418 ) (514,800 ) (39,135 ) 13,128 cash and cash equivalents, beginning of period 110,092 594,321 112,809 66,393 cash and cash equivalents, end of period $ 73,674 $ 79,521 $ 73,674 $ 79,521 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 september 30, six months ended september 30, 2022 2021 2022 2021 (unaudited) (in thousands, except percentages) net income $ 26,299 $ 36,088 $ 48,682 $ 62,410 adjusted to exclude the following: acquisition and other related expenses — — 30 — stock-based compensation 11,353 6,672 20,859 11,799 depreciation and amortization 2,589 1,158 4,959 2,311 provision for (benefit from) income taxes 6,710 (10,717 ) 6,813 (12,119 ) change in fair value of contingent earn-out consideration liability (40 ) — (94 ) — other income, net (908 ) (420 ) (1,712 ) (465 ) adjusted ebitda $ 46,003 $ 32,781 $ 79,537 $ 63,936 revenue $ 102,185 $ 79,350 $ 192,824 $ 152,019 net income margin 26 % 45 % 25 % 41 % adjusted ebitda margin 45 % 41 % 41 % 42 % three months ended september 30, six months ended september 30, 2022 2021 2022 2021 (unaudited) (in thousands) net cash provided by operating activities $ 39,514 $ 19,152 $ 84,266 $ 52,327 purchases of property and equipment (766 ) (200 ) (1,476 ) (241 ) internal-use software development costs (1,051 ) (900 ) (2,466 ) (1,671 ) free cash flow $ 37,697 $ 18,052 $ 80,324 $ 50,415 other cash flow components: net cash used in investing activities $ (18,523 ) $ (534,005 ) $ (60,023 ) $ (591,428 ) net cash provided by (used in) financing activities $ (57,409 ) $ 53 $ (63,378 ) $ 552,229 three months ended september 30, six months ended september 30, 2022 2021 2022 2021 (unaudited) (in thousands, except per share data and percentages) gaap cost of revenue $ 13,210 $ 8,951 $ 26,287 $ 16,937 adjusted to exclude the following: stock-based compensation (2,392 ) (793 ) (4,514 ) (1,061 ) amortization of acquired intangibles (137 ) — (273 ) — non-gaap cost of revenue $ 10,681 $ 8,158 $ 21,500 $ 15,876 gaap gross profit $ 88,975 $ 70,399 $ 166,537 $ 135,082 adjusted to exclude the following: stock-based compensation 2,392 793 4,514 1,061 amortization of acquired intangibles 137 — 273 — non-gaap gross profit $ 91,504 $ 71,192 $ 171,324 $ 136,143 gaap gross margin 87 % 89 % 86 % 89 % non-gaap gross margin 90 % 90 % 89 % 90 % gaap research and development expense $ 19,104 $ 15,460 $ 38,126 $ 28,701 adjusted to exclude the following: stock-based compensation (2,862 ) (1,859 ) (5,414 ) (2,829 ) non-gaap research and development expense $ 16,242 $ 13,601 $ 32,712 $ 25,872 gaap sales and marketing expense $ 29,021 $ 21,161 $ 57,155 $ 40,532 adjusted to exclude the following: stock-based compensation (3,982 ) (1,866 ) (7,056 ) (2,894 ) amortization of acquired intangibles (1,061 ) (265 ) (2,124 ) (530 ) change in fair value of contingent earn-out consideration liability 40 — 94 — non-gaap sales and marketing expense $ 24,018 $ 19,030 $ 48,069 $ 37,108 gaap general and administrative expense $ 8,749 $ 8,827 $ 17,473 $ 16,023 adjusted to exclude the following: acquisition and other related expenses — — (30 ) — stock-based compensation (2,117 ) (2,154 ) (3,875 ) (5,015 ) non-gaap general and administrative expense $ 6,632 $ 6,673 $ 13,568 $ 11,008 gaap operating expense $ 56,874 $ 45,448 $ 112,754 $ 85,256 adjusted to exclude the following: acquisition and other related expenses — — (30 ) — stock-based compensation (8,961 ) (5,879 ) (16,345 ) (10,738 ) amortization of acquired intangibles (1,061 ) (265 ) (2,124 ) (530 ) change in fair value of contingent earn-out consideration liability 40 — 94 — non-gaap operating expense $ 46,892 $ 39,304 $ 94,349 $ 73,988 gaap operating income $ 32,101 $ 24,951 $ 53,783 $ 49,826 adjusted to exclude the following: acquisition and other related expenses — — 30 — stock-based compensation 11,353 6,672 20,859 11,799 amortization of acquired intangibles 1,198 265 2,397 530 change in fair value of contingent earn-out consideration liability (40 ) — (94 ) — non-gaap operating income $ 44,612 $ 31,888 $ 76,975 $ 62,155 gaap net income $ 26,299 $ 36,088 $ 48,682 $ 62,410 adjusted to exclude the following: acquisition and other related expenses — — 30 — stock-based compensation 11,353 6,672 20,859 11,799 amortization of acquired intangibles 1,198 265 2,397 530 change in fair value of contingent earn-out consideration liability (40 ) — (94 ) — income tax effect of non-gaap adjustments (1) (2,627 ) (1,457 ) (4,870 ) (2,589 ) non-gaap net income $ 36,183 $ 41,568 $ 67,004 $ 72,150 non-gaap net income margin 35 % 52 % 35 % 47 % gaap undistributed earnings attributable to participating securities $ — $ — $ — $ (18,326 ) impact on undistributed earnings attributable to participating securities due to non-gaap adjustments — — — (2,055 ) non-gaap undistributed earnings attributable to participating securities $ — $ — $ — $ (20,381 ) non-gaap net income $ 36,183 $ 41,568 $ 67,004 $ 72,150 non-gaap undistributed earnings attributable to participating securities — — — (20,381 ) non-gaap net income attributable to class a and class b stockholders, basic and diluted $ 36,183 $ 41,568 $ 67,004 $ 51,769 weighted-average shares used in computing net income per share attributable to class a and class b common stockholders: basic 193,137 186,171 193,042 137,154 diluted 213,949 216,672 214,452 166,066 non-gaap net income per share attributable to class a and class b stockholders: basic $ 0.19 $ 0.22 $ 0.35 $ 0.38 diluted $ 0.17 $ 0.19 $ 0.31 $ 0.31 (1)
