Doximity (NYSE:DOCS) Exceeds Q4 Expectations But Stock Drops 24.9%

Radek Strnad /
2022/05/17 4:17 pm EDT

Healthcare professional network Doximity (NYSE:DOCS) beat analyst expectations in Q4 FY2022 quarter, with revenue up 40.4% year on year to $93.6 million. Guidance for the full year also exceeded estimates, however the guidance for the next quarter was less impressive, coming in at $89.1 million, 8.06% below analyst estimates. Doximity made a GAAP profit of $36.7 million, improving on its profit of $21.4 million, in the same quarter last year.

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Doximity (DOCS) Q4 FY2022 Highlights:

  • Revenue: $93.6 million vs analyst estimates of $90.1 million (3.86% beat)
  • EPS (non-GAAP): $0.21 vs analyst estimates of $0.15 (41% beat)
  • Revenue guidance for Q1 2023 is $89.1 million at the midpoint, below analyst estimates of $96.9 million
  • Management's revenue guidance for upcoming financial year 2023 is $456 million at the midpoint, in line with analyst expectations and predicting 32.7% growth (vs 70.6% in FY2022)
  • Free cash flow of $44.8 million, up 75.1% from previous quarter
  • Gross Margin (GAAP): 87.4%, in line with same quarter last year

"We're proud to now serve over 2 million US healthcare professionals, including over 80% of US physicians and over 50% of Physician Assistants and Nurse Practitioners," said Jeff Tangney, co-founder & CEO at Doximity.

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

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 incredible over the last year, growing from quarterly revenue of $66.6 million, to $93.6 million.

Doximity Total Revenue

And unsurprisingly, this was another great quarter for Doximity with revenue up 40.4% year on year. But the revenue actually decreased by $4.22 million in Q4, compared to $18.5 million increase in Q3 2022. Shareholders might want to pay closer attention to this as the management is guiding for the decline in sales to continue in the coming quarter

Guidance for the next quarter indicates Doximity is expecting revenue to grow 22.6% year on year to $89.1 million, slowing down from the 99.7% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $456 million at the midpoint, growing 32.7% compared to 70.6% increase in FY2022.

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Key Takeaways from Doximity's Q4 Results

With a market capitalization of $6.31 billion Doximity is among smaller companies, but its more than $798.1 million in cash and positive free cash flow over the last twelve months give us confidence that Doximity has the resources it needs to pursue a high growth business strategy.

We enjoyed seeing Doximity’s impressive revenue growth this quarter. And we were also excited to see that it outperformed analysts' revenue expectations. On the other hand, the revenue guidance for next year indicates a significant slowdown and the revenue guidance for the next quarter missed analysts' expectations. Overall, this quarter's results could have been better. The company is down 24.9% on the results and currently trades at $25.38 per share.

Doximity may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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