Exchange: NYSE | Sector: Healthcare | Industry: Medical Healthcare Information Services
Q1 2025
Published: Aug 8, 2024
Earnings Highlights
Revenue of $126.68M up 16.8% year-over-year
EPS of $0.21 increased by 46.7% from previous year
Gross margin of 89.3%
Net income of 41.38M
"In Q1, a record 590,000 unique active prescribers used our generative AI, telehealth, messaging, and scheduling workflow tools to provide better care for their patients." - Jeff Tangney
Doximity Inc (DOCS) Q1 2025 Results Analysis: AI-Driven Growth, High Retention, and Margin Expansion Propel Upside
Executive Summary
Doximity delivered a standout QQ1 2025 quarter, underscored by top-line growth, robust profitability, and accelerating AI-enabled product adoption. Revenue reached $126.7 million, up 17% year over year, with non-GAAP gross margin at 92% on a quarterly basis and an adjusted EBITDA margin of 52%, exceeding guidance. Management highlighted continued strength in core pharma upsells, the ongoing rollout of the client portal to 30% of clients, and the early traction of Doximity GPT as a tool that dramatically reduces administrative burden for physicians. The quarter also featured strong engagement metrics, including a record 590,000 daily active prescribers using AI, telehealth, and scheduling tools, reaffirming Doximity’s position as the mobile medical office and news feed of medicine.
The company maintained a disciplined path toward sustainable growth through product expansion and expanding addressable demand. New point-of-care and formulary products grew over 70% year over year, aided by the client portal’s real-time ROI insights, which are accelerating upsell decisions. Management reaffirmed guidance for Q2 and the full year, projecting revenue of $126.5–$127.5 million in Q2 (12% growth at the midpoint) and full-year revenue of $514–$523 million (9% growth at the midpoint) with ~49–52% EBITDA margins. Doximity also reiterated a strong balance sheet with roughly $750 million in cash, a dry net cash position overall, and an ongoing share repurchase program that reduced fully diluted shares by 6% since prior year.
Looking ahead, the key drivers include further monetization of the client portal, expanded weekly prescription data, and the ongoing integration of content creation capabilities into a self-serve framework later in the year. Management acknowledged macro uncertainty and signaled a cautious but constructive approach to unbooked revenue, while remaining confident in their competitive position and momentum in pharma upsells. Investors should monitor (1) portal-driven revenue uplift and unit economics, (2) continued acceleration in pharma upsell cycles, (3) speed of content-creation features rollout, and (4) evolving macro health-system demand as the year progresses.
Key Performance Indicators
Revenue
126.68M
QoQ: 7.30% | YoY:16.79%
Gross Profit
113.13M
89.30% margin
QoQ: 7.24% | YoY:18.69%
Operating Income
46.05M
QoQ: 10.04% | YoY:55.15%
Net Income
41.38M
QoQ: 1.87% | YoY:45.66%
EPS
0.22
QoQ: 0.00% | YoY:46.67%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $126.676 million, +17% YoY, +7.3% QoQ; Gross profit: $113.126 million, gross margin 89.3%; EBITDA: $47.517 million, EBITDA margin 37.5%; Operating income: $46.053 million, operating margin 36.4%; Net income: $41.377 million, net margin 32.7%; Earnings per share (diluted): $0.21; Non-GAAP gross margin: 92%; Adjusted EBITDA: $65.9 million, adjusted EBITDA margin 52%; Free cash flow: $39.5 million; Net cash from operating activities: $41.2 million; Cash at end of period: $111.4 million; Net debt: -$97.4 million (net cash position).
Net revenue retention (NRR) 114% on a trailing-12-month basis; NRR for top-20 customers 121%; 102 customers contributing at least $500k in subscription revenue on a trailing 12-month basis (up from 88 a year ago), representing ~82% of total revenue.
Free cash flow margin approximately 31% (FCF $39.5M on $126.7M revenue); cash generation aided by high gross margins and cost discipline; strong balance sheet with substantial liquidity and a modest, iterative buyback program (Q1 share repurchases $48.2M at an average price of $26.3).
Financial Highlights
Financial and operating metrics (QQ1 2025) - Revenue: $126.676 million, +17% YoY, +7.3% QoQ; Gross profit: $113.126 million, gross margin 89.3%; EBITDA: $47.517 million, EBITDA margin 37.5%; Operating income: $46.053 million, operating margin 36.4%; Net income: $41.377 million, net margin 32.7%; Earnings per share (diluted): $0.21; Non-GAAP gross margin: 92%; Adjusted EBITDA: $65.9 million, adjusted EBITDA margin 52%; Free cash flow: $39.5 million; Net cash from operating activities: $41.2 million; Cash at end of period: $111.4 million; Net debt: -$97.4 million (net cash position).
Customer and retention metrics - Net revenue retention (NRR) 114% on a trailing-12-month basis; NRR for top-20 customers 121%; 102 customers contributing at least $500k in subscription revenue on a trailing 12-month basis (up from 88 a year ago), representing ~82% of total revenue.
Cash flow and liquidity - Free cash flow margin approximately 31% (FCF $39.5M on $126.7M revenue); cash generation aided by high gross margins and cost discipline; strong balance sheet with substantial liquidity and a modest, iterative buyback program (Q1 share repurchases $48.2M at an average price of $26.3).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
126.68M
16.79%
7.30%
Gross Profit
113.13M
18.69%
7.24%
Operating Income
46.05M
55.15%
10.04%
Net Income
41.38M
45.66%
1.87%
EPS
0.22
46.67%
0.00%
Key Financial Ratios
currentRatio
6.72
grossProfitMargin
89.3%
operatingProfitMargin
36.4%
netProfitMargin
32.7%
returnOnAssets
3.85%
returnOnEquity
4.53%
debtEquityRatio
0.02
operatingCashFlowPerShare
$0.22
freeCashFlowPerShare
$0.21
priceToBookRatio
5.58
priceEarningsRatio
30.81
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key takeaways from management discussions on the earnings call:
- Strategy and product leadership: Jeff Tangney emphasized AI-first product development and the portal as a core differentiator, stating, We are not AI tourists and have been an early adopter of AI, launching Doximity GPT shortly after ChatGPT. The portal is designed to deliver real-time ROI insights and facilitate easier upsells.
- Network growth and engagement: 590k record unique active prescribers used Doximity's tools in Q1, highlighting the platform’s shift toward a mobile, on-demand workflow for physicians.
- Financial results and guidance: Anna Bryson highlighted 17% YoY revenue growth, 114% trailing NRR, and 52% adjusted EBITDA margin; the company raised outlook for the year with Q2 revenue guidance of $126.5–$127.5M and full-year revenue guidance of $514–$523M.
- Portfolio expansion and ROI focus: New point-of-care and formulary products up >70% YoY; ongoing upsell momentum aided by the client portal’s real-time reporting and weekly prescription data expansion plans.
- M&A/partnership potential: Jeff noted potential expansion via agency partnerships to scale adoption of the portal and content-creation capabilities later in the year, signaling a go-to-market evolution beyond existing client bases.
In Q1, a record 590,000 unique active prescribers used our generative AI, telehealth, messaging, and scheduling workflow tools to provide better care for their patients.
— Jeff Tangney
Dr. Azlan Tariq highlighted how Doximity GPT has halved his time spent on insurer appeal letters, while increasing his appeal approval rate from 10% to 90%.
— Dr. Azlan Tariq
Forward Guidance
Outlook and rationale (based on management commentary and QQ1 results):
- Q2 guidance implies mid-teens to high-single-digit growth relative to prior year (12% growth at the midpoint). The company cites stronger-than-expected upsell activity, especially among pharma brands, and continued demand for high-margin new products and portal-based insights.
- Full-year guidance targets revenue of $514–$523 million, representing 9% growth at the midpoint, with ~49–52% EBITDA margin. The guided range reflects continued macro uncertainty, but management emphasized robust visibility and a higher percentage of revenue under contract (well over 70% at the start of the year, with positive trajectory).
- Key catalysts and monitoring points: (1) portal-driven real-time ROI and pricing dynamics that could accelerate upsell velocity; (2) weekly prescription data data enhancements; (3) content-creation capabilities transitioning to self-serve later in 2024; (4) ongoing demand from large pharma brands and health systems; (5) potential macro headwinds in health systems budget cycles.
- Risks to outlook: macro slowdown in health-system purchasing, potential delays in content creation rollout, competitive intensity, and execution risk in expanding portal access to mid-market customers without proportionate support cost. Overall, the trajectory remains constructive given high gross margins, strong retention, and continued product-driven expansion.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
DOCS Focus
89.30%
36.40%
4.53%
30.81%
TDOC
54.70%
-11.90%
-3.58%
-7.60%
SDGR
51.60%
-1.84%
-10.70%
-8.70%
TXG
67.80%
-42.10%
-8.34%
-18.45%
PGNY
22.40%
6.66%
2.96%
52.12%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The QQ1 2025 results underscore a constructive investment thesis for Doximity. The combination of a highly profitable core platform, expanding AI-enabled product suite, and a rapidly growing, real-time client portal supports durable revenue growth and expanding margins. With net revenue retention at 114% and top-20 customer NRR at 121%, the business demonstrates high stickiness and the ability to upsell within an enterprise customer base. The company’s guidance implies confidence in continued pharma upsell momentum and portal-driven ROI enhancements, with full-year revenue growth targeted at 9% and EBITDA margin near 49–52%. The downside risks relate primarily to macro health-system budgets and potential variability in upsell timing, but the disciplined capital allocation (free cash flow generation and buybacks) and liquidity position provide a solid cushion. Compared with peers and industry benchmarks, Doximity’s margin profile and profitability appear superior for a growth-oriented healthcare IT service, though market valuation remains elevated in anticipation of continued AI-enabled monetization and scale. Investors should monitor portal adoption pace, the rate of weekly prescription data deployment, and the cadence of pharma upsell within the broader macro backdrop to gauge the sustainability of the current growth trajectory.
Key Investment Factors
Growth Potential
High. Doximity’s strategy centers on AI-enabled products (Doximity GPT), a real-time client portal, and expanding content creation capabilities. With NRR at 114% and top-20 customers at 121%, the business model shows durable expansion as existing customers deepen commitment and new products unlock incremental budgets. New offerings (point-of-care/formulary) up >70% YoY indicate meaningful add-on monetization and potential for further cross-sell across pharma and health systems. The portal’s real-time ROI insights are a key facilitator of faster decisioning and larger upsell commitments.
Profitability Risk
Moderate. Revenue concentration remains high (top customers account for a large share of revenue; 102 customers >$500k and 82% of revenue). Macro uncertainty in healthcare budgets could shift purchase timing. Portal adoption, while promising, is not universal; ongoing investment in content creation and customer support is required to sustain higher mix and keep margins elevated. Competitive dynamics in digital healthcare marketing and regulatory/privacy considerations add potential headwinds.
Financial Position
Strong. Balance sheet is cash-rich with $111.4M cash and equivalents at period end, and a net debt position of -$97.4M driven by robust operating cash flow ($41.2M). Free cash flow of $39.5M supports a disciplined buyback program ($48.2M repurchased in Q1) and potential for accelerated shareholder value creation. Non-GAAP gross margin at 92% and EBITDA margin around 52% illustrate scalable, high-margin software-like economics.