Doximity Announces Fiscal 2022 Third Quarter Financial Results

Total revenues of $97.9 million, up 67% year-over-year

Net income margin of 57% and adjusted EBITDA margin of 48%

News provided by

Doximity, Inc.

Feb 08, 2022, 16:01 ET

SAN FRANCISCO, Feb. 8, 2022 /PRNewswire/ -- Doximity, Inc. (NYSE: DOCS), the leading digital platform for U.S. medical professionals, today announced results for the fiscal 2022 third quarter ended December 31, 2021.

"We had a strong Q3 led by our existing clients as our net revenue retention rate hit 171%," said Jeff Tangney, co-founder & CEO at Doximity. "Our telehealth platform grew to 350,000 active providers and we agreed to acquire Amion which powers nearly 200,000 physician schedules. It's our life's work to build the physician cloud – a digital platform to help physicians save time, so they can provide better care for patients."

Doximity Acquiring Amion: More information can be found in the press release at https://investors.doximity.com.

Fiscal 2022 Third Quarter Financial Highlights

All comparisons, unless otherwise noted, are to the three months ended December 31, 2020.

  • Revenue: Revenue of $97.9 million, versus $58.7 million, an increase of 67% year-over-year.
  • Net income and non-GAAP net income: Net income of $55.6 million, versus $17.2 million, representing a 57% margin. Non-GAAP net income of $63.6 million, versus $19.5 million, representing a 65% margin.
  • Adjusted EBITDA: Adjusted EBITDA of $47.0 million, versus $21.5 million, an increase of 119% year-over-year, representing adjusted EBITDA margins of 48%, versus 37%.
  • Net income per share and non-GAAP net income per share: Diluted net income per share was $0.26, versus $0.05, while non-GAAP diluted net income per share was $0.29, versus $0.07.
  • Operating cash flow and free cash flow: Operating cash flow of $27.3 million, versus $24.0 million, and free cash flow of $25.6 million, versus $22.9 million.

Financial Outlook

Doximity is providing guidance for its fiscal fourth quarter ending March 31, 2022 as follows:

  • Revenue between $89.0 million and $90.0 million.
  • Adjusted EBITDA between $34.0 million and $35.0 million.

Doximity is updating guidance for its fiscal year ending March 31, 2022 as follows:

  • Revenue between $338.9 million and $339.9 million.
  • Adjusted EBITDA between $144.9 million and $145.9 million.

Doximity is providing preliminary guidance for its fiscal year ending March 31, 2023 as follows:

  • Revenue growth of about 33% (excluding the Amion acquisition) to approximately $450 million.
  • Adjusted EBITDA margin of 40% or greater (excluding the Amion acquisition).

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 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 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, please 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 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); (ii) our ability to retain existing members or add new members to our platform and maintain or grow their engagement with our platform; (iii) our ability to attract new customers or retain existing customers; (iv) the impact of our prioritization of our members' interests; (v) breaches in our security measures or unauthorized access to members' data; (vi) 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 prospectus for our recent offering of shares of Class A common stock shares that was filed with the SEC on June 25, 2021, and in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, as such risk factors may be updated from time to time in our periodic filings with the SEC. Additional information will be provided in our Quarterly Report on Form 10-Q for the  quarterly period ended December 31, 2021. 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.

Investor Relations Contact:
Perry Gold
[email protected]

Media Contact:
[email protected]

DOXIMITY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)



December 31, 2021


March 31, 2021

Assets




Current assets:




Cash and cash equivalents

$                      85,079


$                      66,393

Marketable securities

680,499


76,141

Accounts receivable, net

69,823


50,319

Prepaid expenses and other current assets

17,917


10,692

Deferred contract costs, current

5,060


5,856

Total current assets

858,378


209,401

Property and equipment, net

8,221


7,598

Deferred income tax assets

35,431


2,112

Operating lease right-of-use assets

1,589


1,339

Intangible assets, net

8,802


9,596

Goodwill

18,915


18,915

Other assets

836


2,758

Total assets

$                    932,172


$                    251,719

Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity




Current liabilities:




Accounts payable

$                        1,230


$                        1,515

Accrued expenses and other current liabilities

23,980


16,285

Deferred revenue, current

65,576


83,272

Operating lease liabilities, current

927


970

Total current liabilities

91,713


102,042

Deferred revenue, non-current

38


220

Operating lease liabilities, non-current

668


284

Other liabilities, non-current

905


972

Total liabilities

93,324


103,518





Redeemable Convertible Preferred Stock




Redeemable convertible preferred stock

—


81,458

Stockholders' Equity




Preferred stock

—


—

Common stock

190


83

Additional paid-in capital

688,290


30,357

Accumulated other comprehensive loss

(4,013)


(21)

Retained earnings

154,381


36,324

Total stockholders' equity

838,848


66,743

Total liabilities, redeemable convertible preferred stock, and stockholders' equity

$                    932,172


$                    251,719

DOXIMITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)



Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020

Revenue

$          97,876


$          58,709


$        249,895


$        140,210

Cost of revenue(1)

11,085


7,872


28,022


23,203

Gross profit

86,791


50,837


221,873


117,007

Operating expenses(1):








Research and development

16,225


11,406


44,926


31,315

Sales and marketing

25,698


17,017


66,230


44,447

General and administrative

9,079


4,478


25,102


10,789

Total operating expenses

51,002


32,901


136,258


86,551

Income from operations

35,789


17,936


85,615


30,456

Other income, net

20


4,601


485


4,428

Income before income taxes

35,809


22,537


86,100


34,884

Provision for (benefit from) income taxes

(19,838)


5,306


(31,957)


6,157

Net income

$          55,647


$          17,231


$        118,057


$          28,727

Undistributed earnings attributable to participating securities

—


(11,831)


(21,866)


(17,907)

Net income attributable to Class A and Class B common stockholders, basic and diluted

$          55,647


$            5,400


$          96,191


$          10,820

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








Basic

$               0.30


$               0.07


$               0.62


$               0.15

Diluted

$               0.26


$               0.05


$               0.53


$               0.12

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








Basic

188,372


77,766


154,289


72,590

Diluted

216,396


99,923


182,905


92,286


(1) Costs and expenses include share-based compensation expenses as follows:



Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020

Cost of revenue

$            1,912


$                179


$            2,973


$                368

Research and development

2,035


634


4,864


1,179

Sales and marketing

2,681


633


5,575


1,304

General and administrative

3,206


774


8,221


1,531

Total stock-based compensation expense

$            9,834


$            2,220


$          21,633


$            4,382

DOXIMITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020

Cash flows from operating activities








Net income

$        55,647


$        17,231


$      118,057


$        28,727

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








Depreciation and amortization

1,361


1,015


3,672


2,711

Deferred income taxes

(31,972)


3,450


(31,972)


4,073

Stock-based compensation, net of amounts capitalized

9,834


2,220


21,633


4,382

Other

642


(287)


570


(182)

Non-cash lease expense

288


718


857


2,012

Bad debt expense (recovery)

(120)


(47)


75


(43)

Amortization of premium on marketable securities, net

1,302


44


2,863


58

Gain on sale of business

—


(4,698)


—


(4,698)

Amortization of deferred contract costs

1,710


1,557


7,366


4,697

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








Accounts receivable

(14,021)


403


(19,579)


(14,487)

Prepaid expenses and other assets

10,722


(596)


(7,003)


167

Deferred contract costs

(3,697)


(3,215)


(6,672)


(5,970)

Accounts payable

453


(658)


162


(933)

Accrued expenses and other current liabilities

8,417


6,155


7,998


5,512

Deferred revenue

(13,111)


830


(17,538)


19,373

Operating lease liabilities

(173)


(730)


(811)


(2,040)

Other liabilities

2


569


(67)


2,063

Net cash provided by operating activities

27,284


23,961


79,611


45,422

Cash flows from investing activities








Purchases of property and equipment

(611)


(6)


(852)


(98)

Capitalized internal-use software

(1,065)


(1,069)


(2,736)


(3,599)

Purchases of marketable securities

(115,772)


(34,399)


(1,271,915)


(34,399)

Maturities of marketable securities

6,066


4,000


41,617


38,000

Sales of marketable securities

85,862


—


616,938


—

Cash paid for acquisition, net of cash acquired

—


(48)


—


(31,682)

Other

—


25


—


—

Proceeds from sale of business

—


4,230


—


4,230

Net cash used in investing  activities

(25,520)


(27,267)


(616,948)


(27,548)

Cash flows from financing activities








Proceeds from issuance of common stock upon initial public offering after deducting underwriting discounts and commissions

—


—


553,905


—

Payments of deferred offering costs

—


(381)


(3,982)


(381)

Proceeds from issuance of common stock upon exercise of stock options

4,174


3,075


9,234


4,422

Taxes paid related to net share settlement of equity awards

(380)


—


(436)


—

Repurchase of common stock

—


(370)


(2,698)


(370)

Net cash provided by financing activities

3,794


2,324


556,023


3,671

Net increase (decrease) in cash and cash equivalents

5,558


(982)


18,686


21,545

Cash and cash equivalents, beginning of period

79,521


70,957


66,393


48,430

Cash and cash equivalents, end of period 

$        85,079


$        69,975


$        85,079


$        69,975

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, 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, and other income, net. 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 capitalized internal-use software development cost.

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 Metrics

  • Net revenue retention rate: We calculate net revenue retention rate 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.
  • Customers with trailing 12-month subscription revenue greater than $100,000: We calculate the number of customers with TTM product revenue greater than $100,000 by counting the number of customers that contributed more than $100,000 in subscription revenue in the TTM period. The number of customers with TTM subscription-based revenue of at least $100,000 is a key indicator of the scale of our business. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity.

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,


2021


2020


2021


2020


(unaudited)


(in thousands)

Net income

$   55,647


$   17,231


$ 118,057


$   28,727

Adjusted to exclude the following:








Acquisition and other related expenses

—


326


—


470

Stock-based compensation

9,834


2,220


21,633


4,382

Depreciation and amortization

1,361


1,015


3,672


2,711

Provision for (benefit from) income taxes

(19,838)


5,306


(31,957)


6,157

Other income, net

(20)


(4,601)


(485)


(4,428)

Adjusted EBITDA

$   46,984


$   21,497


$ 110,920


$   38,019









Revenue

$   97,876


$   58,709


$ 249,895


$ 140,210

Net income margin

57     %


29     %


47     %


20     %

Adjusted EBITDA margin

48     %


37     %


44     %


27     %


Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020


(unaudited)


(in thousands)

Net cash provided by operating activities

$       27,284


$       23,961


$       79,611


$       45,422

Purchases of property and equipment

(611)


(6)


(852)


(98)

Capitalized internal-use software

(1,065)


(1,069)


(2,736)


(3,599)

Free cash flow

$       25,608


$       22,886


$       76,023


$       41,725

Other cash flow components:








Net cash used in investing activities

$     (25,520)


$     (27,267)


$   (616,948)


$     (27,548)

Net cash provided by financing activities

$         3,794


$         2,324


$     556,023


$         3,671


Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020


(unaudited)


(in thousands, except percentages)

GAAP cost of revenue

$   11,085


$     7,872


$   28,022


$   23,203

Adjusted to exclude the following:








Stock-based compensation

(1,912)


(179)


(2,973)


(368)

Non-GAAP cost of revenue

$     9,173


$     7,693


$   25,049


$   22,835









GAAP gross profit

$   86,791


$   50,837


$ 221,873


$ 117,007

Adjusted to exclude the following:








Stock-based compensation

1,912


179


2,973


368

Non-GAAP gross profit

$   88,703


$   51,016


$ 224,846


$ 117,375









GAAP gross margin

89     %


87     %


89     %


83     %

Non-GAAP gross margin

91     %


87     %


90     %


84     %









GAAP research and development expense

$   16,225


$   11,406


$   44,926


$   31,315

Adjusted to exclude the following:








Stock-based compensation

(2,035)


(634)


(4,864)


(1,179)

Non-GAAP research and development expense

$   14,190


$   10,772


$   40,062


$   30,136









GAAP sales and marketing expense

$   25,698


$   17,017


$   66,230


$   44,447

Adjusted to exclude the following:








Stock-based compensation

(2,681)


(633)


(5,575)


(1,304)

Amortization of acquired intangibles

(265)


(303)


(795)


(817)

Non-GAAP sales and marketing expense

$   22,752


$   16,081


$   59,860


$   42,326









GAAP general and administrative expense

$     9,079


$     4,478


$   25,102


$   10,789

Adjusted to exclude the following:








Acquisition and other related expenses

—


(326)


—


(470)

Stock-based compensation

(3,206)


(774)


(8,221)


(1,531)

Non-GAAP general and administrative expense

$     5,873


$     3,378


$   16,881


$     8,788









GAAP operating expense

$   51,002


$   32,901


$ 136,258


$   86,551

Adjusted to exclude the following:








Acquisition and other related expenses

—


(326)


—


(470)

Stock-based compensation

(7,922)


(2,041)


(18,660)


(4,014)

Amortization of acquired intangibles

(265)


(303)


(795)


(817)

Non-GAAP operating expense

$   42,815


$   30,231


$ 116,803


$   81,250









GAAP operating income

$   35,789


$   17,936


$   85,615


$   30,456

Adjusted to exclude the following:








Acquisition and other related expenses

—


326


—


470

Stock-based compensation

9,834


2,220


21,633


4,382

Amortization of acquired intangibles

265


303


795


817

Non-GAAP operating income

$   45,888


$   20,785


$ 108,043


$   36,125


Three Months Ended
December 31,


Nine Months Ended
December 31,


2021


2020


2021


2020


(unaudited)


(in thousands, except per share data and percentages)

GAAP net income

$  55,647


$  17,231


$  118,057


$  28,727

Adjusted to exclude the following:








Acquisition and other related expenses

—


326


—


470

Stock-based compensation

9,834


2,220


21,633


4,382

Amortization of acquired intangibles

265


303


795


817

Income tax effect of non-GAAP adjustments (1)

(2,121)


(598)


(4,710)


(1,190)

Non-GAAP net income

$  63,625


$  19,482


$  135,775


$  33,206

Non-GAAP net income margin

65     %


33     %


54     %


24     %









GAAP undistributed earnings attributable to participating securities

$          —


$ (11,831)


$ (21,866)


$ (17,907)

Impact on undistributed earnings attributable to participating securities due to non-GAAP adjustments

—


(1,114)


(2,436)


(2,295)

Non-GAAP undistributed earnings attributable to participating securities

$          —


$ (12,945)


$ (24,302)


$ (20,202)









Non-GAAP net income

$  63,625


$  19,482


$  135,775


$  33,206

Non-GAAP undistributed earnings attributable to participating securities

—


(12,945)


(24,302)


(20,202)

Non-GAAP net income attributable to Class A and Class B stockholders, basic and diluted

$  63,625


$     6,537


$  111,473


$  13,004









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








Basic

188,372


77,766


154,289


72,590

Diluted

216,396


99,923


182,905


92,286









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








Basic

$       0.34


$       0.08


$       0.72


$       0.18

Diluted

$       0.29


$       0.07


$       0.61


$       0.14


(1) For the three and nine months ended December 31, 2021 and 2020, management used an estimated annual effective non-GAAP tax rate of 21.0%.

SOURCE Doximity, Inc.