Doximity (NYSE:DOCS) Delivers Strong Q2 Numbers, Stock Jumps 26.6%

Radek Strnad /
2023/11/09 4:15 pm EST

Healthcare professional network Doximity (NYSE:DOCS) reported Q2 FY2024 results beating Wall Street analysts' expectations, with revenue up 11.2% year on year to $113.6 million. On top of that, next quarter's revenue guidance ($127.5 million at the midpoint) was surprisingly good and 3.6% above what analysts were expecting. Turning to EPS, Doximity made a GAAP profit of $0.15 per share, improving from its profit of $0.12 per share in the same quarter last year.

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Doximity (DOCS) Q2 FY2024 Highlights:

  • Revenue: $113.6 million vs analyst estimates of $109.1 million (4.1% beat)
  • Adjusted EBITDA: $54.2 million handily beat expectations of $44.8 million
  • EPS (non-GAAP): $0.22 vs analyst estimates of $0.18 (21.1% beat)
  • Revenue Guidance for Q3 2024 is $127.5 million at the midpoint, above analyst estimates of $123.1 million
  • The company lifted its revenue guidance for the full year from $460 million to $466 million at the midpoint, a 1.3% increase
  • Free Cash Flow of $11.62 million, down 79.1% from the previous quarter
  • Gross Margin (GAAP): 88.8%, up from 87.1% in the same quarter last year

“We’re proud to make medicine mobile, with another quarter of record engagement across our entire platform,” said Jeff Tangney, co-founder and CEO of Doximity.

Founded in 2010 and named for a combination of “docs” and “proximity”, Doximity (NYSE: DOCS) is the leading social network for U.S. medical professionals.

Healthcare And Life Sciences Software

The coronavirus pandemic has underscored the importance of high-quality health infrastructure in times of crisis. Coupled with intense competition between drugmakers and the growing volume of data in the health care sector, demand for data management solutions in the healthcare space is expected to remain strong in the years ahead.

Sales Growth

As you can see below, Doximity's revenue growth has been strong over the last two years, growing from $79.35 million in Q2 FY2022 to $113.6 million this quarter.

Doximity Total Revenue

This quarter, Doximity's quarterly revenue was once again up 11.2% year on year. On top of that, its revenue increased $5.14 million quarter on quarter, a strong improvement from the $2.50 million decrease in Q1 2024. This is a sign of re-acceleration of growth and very nice to see indeed.

Next quarter's guidance suggests that Doximity is expecting revenue to grow 10.6% year on year to $127.5 million, slowing down from the 17.8% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 8% over the next 12 months before the earnings results announcement.

The pandemic fundamentally changed several consumer habits. There is a founder-led company that is massively benefiting from this shift. The business has grown astonishingly fast, with 40%+ free cash flow margins. Its fundamentals are undoubtedly best-in-class. Still, the total addressable market is so big that the company has room to grow many times in size. You can find it on our platform for free.

Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Doximity's free cash flow came in at $11.62 million in Q2, down 69.2% year on year.

Doximity Free Cash Flow

Doximity has generated $160.3 million in free cash flow over the last 12 months, an eye-popping 36% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.

Key Takeaways from Doximity's Q2 Results

Sporting a market capitalization of $4.10 billion, Doximity is among smaller companies, but its more than $729.9 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.

This was a classic "beat and raise" quarter that investors love. The company beat on revenue and handily beat expectations for Adjusted EBITDA and EPS as well. Additionally, it was good to see Doximity's optimistic revenue and adjusted EBITDA guidance for next quarter, which exceeded analysts' expectations. Lastly, revenue and adjusted EBITDA guidance for the full year were both raised from the previous outlook given last quarter. Overall, we think this was a strong quarter with no major flaws that should satisfy shareholders. The stock is up 26.6% after reporting and currently trades at $25.95 per share.

Doximity may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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The author has no position in any of the stocks mentioned in this report.