Healthcare professional network Doximity (NYSE: DOCS) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 17.1% year on year to $138.3 million. On the other hand, next quarter’s revenue guidance of $139.5 million was less impressive, coming in 2.4% below analysts’ estimates. Its non-GAAP profit of $0.38 per share was 39.3% above analysts’ consensus estimates.
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Doximity (DOCS) Q1 CY2025 Highlights:
- Revenue: $138.3 million vs analyst estimates of $133.6 million (17.1% year-on-year growth, 3.5% beat)
- Adjusted EPS: $0.38 vs analyst estimates of $0.27 (39.3% beat)
- Adjusted Operating Income: $67.97 million vs analyst estimates of $63.08 million (49.1% margin, 7.8% beat)
- Management’s revenue guidance for the upcoming financial year 2026 is $625 million at the midpoint, missing analyst estimates by 2.3% and implying 9.6% growth (vs 19.7% in FY2025)
- EBITDA guidance for the upcoming financial year 2026 is $339 million at the midpoint, below analyst estimates of $348 million
- Operating Margin: 35.2%, in line with the same quarter last year
- Free Cash Flow Margin: 70.1%, up from 37.6% in the previous quarter
- Market Capitalization: $11.16 billion
“We closed out fiscal 2025 on a high note, with record engagement, strong profits, and 20% annual revenue growth,” said Jeff Tangney, co-founder and CEO of Doximity.
Company Overview
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.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, Doximity grew its sales at a 18.4% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds. Luckily, there are other things to like about Doximity.
This quarter, Doximity reported year-on-year revenue growth of 17.1%, and its $138.3 million of revenue exceeded Wall Street’s estimates by 3.5%. Company management is currently guiding for a 10.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 11% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is above average for the sector and implies the market sees some success for its newer products and services.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Doximity is extremely efficient at acquiring new customers, and its CAC payback period checked in at 5.9 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.
Key Takeaways from Doximity’s Q1 Results
We were impressed by how significantly Doximity blew past analysts’ revenue and EBITDA expectations this quarter. On the other hand, its revenue guidance for next year fell short of Wall Street's estimates and suggests a significant slowdown in demand. Overall, this was a weaker quarter. The stock traded down 18.2% to $47.80 immediately after reporting.
Doximity’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
