Doximity, Inc. — FY2024 Form 10-K
Reporting period: Fiscal year ended March 31, 2024; comparisons are primarily with the fiscal year ended March 31, 2023. Although the request metadata says “2023 Q4,” this filing is an annual report for FY2024, not a quarterly filing.
Business context
Doximity operates a digital platform for U.S. medical professionals, with more than 2 million registered members and over 80% of U.S. physicians represented. It generates revenue mainly from subscription-based Marketing and Hiring Solutions sold to pharmaceutical companies and health systems; Productivity Solutions include telehealth, scheduling, and AI-assisted writing tools. Approximately 95% of FY2024 revenue came from subscription customers.
Financial performance
| Metric | FY2024 | FY2023 |
|---|---|---|
| Revenue | $475.4 million | $419.1 million |
| Gross profit / margin | $424.8 million / 89% | $365.6 million / 87% |
| Operating income / margin | $163.9 million / 34% | $125.1 million / 30% |
| Net income / margin | $147.6 million / 31% | $112.8 million / 27% |
| Diluted earnings per share | $0.72 | $0.53 |
| Adjusted EBITDA / margin | $230.5 million / 48% | $184.0 million / 44% |
| Operating cash flow | $184.1 million | $179.6 million |
| Free cash flow | $178.3 million | $173.4 million |
Adjusted EBITDA and free cash flow are non-GAAP measures. Revenue grew 13%, compared with 22% growth in FY2023. Subscription revenue increased $60.3 million, including $50.9 million from expansion within existing customers and $9.4 million from new subscription customers. Management attributed existing-customer expansion chiefly to a 19% increase in average Marketing Solutions revenue per existing customer. Net revenue retention declined to 114% from 117%.
Cash and cash equivalents were $96.8 million and marketable securities were $666.1 million at year-end, totaling $762.9 million. Total liabilities were $178.0 million; the filing reports no off-balance-sheet arrangements and does not identify outstanding borrowings. Operating cash flow exceeded net income, while financing cash outflow was $276.5 million, primarily due to $280.7 million of share repurchases. The company says available cash and marketable securities should cover working capital and capital expenditure needs for at least 12 months.
Material changes and unusual items
- Gross margin increased two percentage points, with management citing revenue growth and lower cost of revenue following workforce restructuring.
- In August 2023, Doximity reduced its workforce by approximately 10%. FY2024 restructuring expense was $7.9 million, including $4.3 million of severance and benefits and $3.6 million of accelerated stock compensation.
- Net income rose year over year, but remained below FY2022’s $154.8 million. FY2024 included $21.3 million of other income, mainly interest income, versus $8.0 million in FY2023. Income-tax expense increased to $37.6 million from $20.3 million.
- Year-end cash and cash equivalents fell from $158.0 million to $96.8 million, while marketable securities declined from $683.0 million to $666.1 million.
- After year-end, the board authorized a new share repurchase program of up to $500 million on May 1, 2024, with no expiration date.
Outlook, risks, and contingencies
The filing provides no quantified revenue or earnings guidance. Management expects gross margin to remain relatively steady in the near term, while noting quarterly variability; it expects research and development and general and administrative expenses to rise in absolute dollars and sales and marketing to remain its largest expense. Management cautions that historical growth may not indicate future results.
Key risks include slower revenue growth, customer renewals and concentration, competition for members and customer spending, macroeconomic pressures, privacy and cybersecurity obligations, healthcare regulation, and the adoption and regulation of AI-based products. The company also highlights dependence on third-party platforms and cloud services, as well as risks to member trust and engagement. No customer contributed 10% or more of revenue in FY2024, but two customers each represented at least 10% of accounts receivable at year-end.
Beginning in April 2024, Doximity and certain directors and officers were named in a putative securities class action alleging misrepresentations or omissions concerning growth and profitability, and a related derivative action. The company intends to defend the cases; it said it could not predict the outcome or reasonably estimate any potential loss. No loss contingencies were recorded for the years presented. The filing reports no cybersecurity incident identified as materially affecting, or reasonably likely to materially affect, the company. Deloitte issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Whether the slower revenue growth and lower net revenue retention continue, and whether existing-customer expansion can offset churn or reduced spending.
- How much of reported profit and cash generation depends on interest income, stock-based compensation adjustments, and other non-GAAP exclusions.
- The financial and disclosure consequences, if any, of the April 2024 lawsuits, for which potential loss was not estimable.
- The pace and terms of share repurchases under the new $500 million authorization, alongside ongoing investment and liquidity needs.
- Whether member engagement, customer concentration, privacy and security compliance, and AI-related product adoption support continued growth.