Doximity, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended March 31, 2023. Although the request metadata says “2022 Q4,” this filing is an annual report for FY2023, not a quarterly report for calendar 2022.
Business context
Doximity operates a digital platform for U.S. medical professionals, with more than 2 million members as of March 31, 2023. Its principal revenue sources are subscription-based Marketing and Hiring Solutions; it also offers telehealth, recruiting, and scheduling products. Approximately 93% of FY2023 revenue came from subscription customers.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $419.1 million | $343.5 million |
| Revenue growth | 22% | 66% |
| Gross profit / margin | $365.6 million / 87% | $303.8 million / 88% |
| Operating income / margin | $125.1 million / 30% | $113.5 million / 33% |
| Net income / margin | $112.8 million / 27% | $154.8 million / 45% |
| Adjusted EBITDA / margin | $184.0 million / 44% | $150.3 million / 44% |
| Operating cash flow | $179.6 million | $126.6 million |
| Free cash flow | $173.4 million | $120.9 million |
Revenue grew $75.5 million, primarily from a $70.4 million increase in subscription revenue: $15.3 million from new customers and $55.1 million from existing-customer expansion. Marketing Solutions revenue per existing customer increased 21%. The company reported 294 customers with over $100,000 of trailing-12-month revenue, whose spending represented about 87% of total revenue. Net revenue retention fell to 117% from 157%.
Net income declined despite revenue and operating-income growth, chiefly because FY2022 included a $40.8 million income-tax benefit, while FY2023 had $20.3 million of tax expense. FY2023 other income was $8.0 million, primarily reflecting higher interest income. Stock-based compensation was $47.8 million, up from $31.4 million.
At March 31, 2023, cash and cash equivalents were $158.0 million and marketable securities were $683.0 million, totaling $841.0 million. Total assets were $1.137 billion and total liabilities $170.8 million. The filing does not report borrowings or financial debt; reported liabilities include deferred revenue, leases, and acquisition earn-out obligations. Management said existing cash and marketable securities should fund working capital and capital expenditures for at least 12 months.
Material changes and unusual items
- Revenue growth decelerated to 22% from 66%; net revenue retention declined by 40 percentage points.
- Gross margin eased to 87% from 88%, with higher personnel costs and U.S. News partnership expenses cited as factors. Operating margin fell to 30% from 33% as operating expenses grew faster than revenue.
- Doximity acquired AMiON on April 1, 2022. Acquisition-date consideration was $74.6 million, comprising $53.5 million cash and $21.1 million estimated contingent consideration; the earn-out may total up to $24.0 million. The acquisition added $49.0 million of goodwill.
- The company repurchased $85.3 million of stock during FY2023. A separate $70 million authorization begun in October 2022 had $54.0 million remaining at year-end.
- Marketable securities had $18.9 million of gross unrealized losses at year-end; management reported no credit-loss impairment and said it did not intend, and was not likely required, to sell before recovery or maturity.
Outlook, risks, and contingencies
The filing provides no numeric revenue or earnings guidance. Management expects continued investment in research and development, sales and marketing, cloud infrastructure, and customer support; it expects gross margin to remain relatively steady in the near term, though quarterly margins may fluctuate. Management cautions that historical growth is not indicative of future results.
Principal risks include slower customer spending or renewals amid economic uncertainty, reliance on customer expansion and member engagement, competition across marketing, hiring, and telehealth, and privacy, cybersecurity, HIPAA, and other healthcare regulatory exposure. Pharmaceutical marketing spend can also be affected by brand performance and patent expirations. The company cited customer concentration risk: no customer represented 10% of FY2023 revenue, but one customer accounted for 18% of year-end receivables.
Commitments include $6.6 million of remaining noncancelable U.S. News minimum guarantees and $5.2 million of remaining web-hosting commitments. Operating lease liabilities totaled $15.6 million. Doximity reported no material pending legal matters or recorded loss contingencies. Deloitte issued unqualified opinions on the financial statements and internal control over financial reporting.
Key facts for investors to verify
- Whether subscription growth and customer expansion can sustain revenue as growth and net revenue retention slow.
- How much of reported profitability depends on stock-based compensation adjustments in non-GAAP adjusted EBITDA.
- AMiON’s customer retention, performance against earn-out metrics, and integration contribution.
- Customer receivable concentration and collection trends, given accounts receivable growth and the disclosed large-customer exposure.
- Potential effects of privacy, cybersecurity, healthcare regulation, and U.S. News partnership commitments on costs and operations.
- Repurchase activity and remaining authorization, alongside the company’s capital needs and equity-compensation dilution.