Healthcare professional network Doximity (NYSE:DOCS) reported Q2 FY2023 results beating Wall St's expectations, with revenue up 28.7% year on year to $102.1 million. However, guidance for the next quarter was less impressive, coming in at $111.2 million at the midpoint, being 4.03% below analyst estimates. Doximity made a GAAP profit of $26.2 million, down on its profit of $36 million, in the same quarter last year.
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Doximity (DOCS) Q2 FY2023 Highlights:
- Revenue: $102.1 million vs analyst estimates of $100.3 million (1.83% beat)
- EPS (non-GAAP): $0.17 vs analyst estimates of $0.16 (7.37% beat)
- Revenue guidance for Q3 2023 is $111.2 million at the midpoint, below analyst estimates of $115.8 million
- The company reconfirmed revenue guidance for the full year, at $428 million at the midpoint
- Free cash flow of $37.6 million, down 11.5% from previous quarter
- Gross Margin (GAAP): 87%, down from 88.7% same quarter last year
“We were pleased to beat on both our top and bottom lines while delivering our first nine-figure revenue quarter,” said Jeff Tangney, co-founder and 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.
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Sales Growth
As you can see below, Doximity's revenue growth has been exceptional over the last two years, growing from quarterly revenue of $45.1 million in Q2 FY2021, to $102.1 million.
This quarter, Doximity's quarterly revenue was once again up a very solid 28.7% year on year. On top of that, revenue increased $11.5 million quarter on quarter, a strong improvement on the $3.01 million decrease in Q1 2023, and a sign of re-acceleration of growth, which is very nice to see indeed.
Guidance for the next quarter indicates Doximity is expecting revenue to grow 13.6% year on year to $111.2 million, slowing down from the 66.7% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 23.4% over the next twelve months.
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Cash Is King
If you have followed StockStory for a while, you know that we put an emphasis on cash flow. Why, you ask? We believe that in the end cash is king, as you can't use accounting profits to pay the bills. Doximity's free cash flow came in at $37.6 million in Q2, up 108% year on year.
Doximity has generated $150.7 million in free cash flow over the last twelve months, an impressive 39.2% of revenues. This robust FCF margin is a result of Doximity asset lite business model, scale advantages, and strong competitive positioning, and provides it the option to return capital to shareholders while still having plenty of cash to invest in the business.
Key Takeaways from Doximity's Q2 Results
With a market capitalization of $4.64 billion Doximity is among smaller companies, but its more than $749.9 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.
It was good to see Doximity deliver strong revenue growth this quarter. And we were also happy to see it topped analysts’ revenue expectations, even if just narrowly. On the other hand, it was unfortunate to see that the revenue guidance for the next quarter missed analysts' expectations. Overall, this quarter's results were not the best we've seen from Doximity. The company is down 3.22% on the results and currently trades at $25.49 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.