Doximity: Strong Growth but What's Next?
Here's our initial take on Doximity's (NYSE: DOCS) financial report.
Key Metrics
| Metric | Q4 2024 | Q4 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $118.1 million | $138.3 million | 17% | Beat |
| Earnings per share (adjusted) | $0.25 | $0.38 | 52% | Beat |
| Free cash flow | $62.3 million | $97.0 million | 0.56 | n/a |
| Customers contributing over $500,000 in revenue | 99 | 116 | 17% | n/a |
Solid earnings but weak guidance
At first glance, Doximity's earnings report looked rather strong. In its fiscal fourth quarter (ended March 31), the digital medical platform provider reported 17% year-over-year revenue growth, which handily beat analysts' expectations. On the bottom line, the company's $0.38 adjusted earnings per share (EPS) was significantly greater than the $0.27 analysts had expected.
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Beyond the headline numbers, Doximity's earnings report was generally solid. Free cash flow increased by 56% year over year, and for the full fiscal year, the company reported a stellar 47% free cash flow margin.
The report wasn't all good news, however. Doximity's guidance wasn't quite what analysts had been looking for. For the first quarter, Doximity is guiding for $139.5 million in revenue at the midpoint of its range. Not only would that represent 1% sequential growth, but it also fell far short of analysts' expectations of $143 million.
For the full year, it wasn't much better. The consensus called for $635 million in revenue for the fiscal year ending in March 2026, and Doximity guided for $625 million at the midpoint. This would translate into 9.6% year-over-year revenue growth, much more of a deceleration than analysts expected.
Immediate market reaction
Unsurprisingly, the initial reaction to Doximity's earnings was negative. While the fiscal fourth-quarter results were impressive, giving disappointing forward guidance is a pretty certain recipe for a negative move in a stock.
As of 3:30 p.m. ET on May 16, the day after the earnings announcement, Doximity was trading lower by about 10%. After spiking higher earlier in the year, the stock is now at about 37% below its highs.
What to watch
Doximity still sees a massive opportunity ahead of it, estimating its addressable market at about $18.5 billion. Based on trailing-12-month revenue, it currently has about 3% of this amount. With slower growth projected going forward, it's a question of whether Doximity is having trouble maintaining its momentum now that about 80% of U.S. physicians already use the platform or if management is simply being cautious in a weakening economic climate.
Helpful resources
- Full earnings report
- Investor relations page
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Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Doximity. The Motley Fool has a disclosure policy.
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