Business Context and Reporting Period
Company: Doximity, Inc. (DOCS)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended March 31, 2026
Business Overview: Doximity is the leading physician-first tech company with over 3 million registered members, representing more than 85% of U.S. physicians. The platform provides AI-powered tools for clinical workflows, professional networking, and marketing/hiring solutions for pharmaceutical manufacturers and health systems.
Key Financial Metrics
| Metric | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Revenue | $644.9 million | $570.4 million | +13% |
| Net Income | $196.1 million | $223.2 million | -12% |
| Adjusted EBITDA | $357.8 million | $313.8 million | +14% |
| Gross Margin | 89% | 90% | -100 bps |
| Operating Cash Flow | $326.5 million | $273.3 million | +19% |
| Free Cash Flow | $317.5 million | $266.7 million | +19% |
| Cash & Marketable Securities | $748.6 million | $915.7 million | -17% |
Note: Net income decreased primarily due to increased stock-based compensation and tax impacts, despite revenue growth.
Material Changes vs. Prior Period
- Revenue Growth: Driven by a $64.6 million increase in subscription revenue, split between $16.2 million from new customers and $48.4 million from existing customer expansion (10% increase in average revenue per Marketing Solutions customer).
- Expense Increases:
- R&D: Increased 40% ($37.7 million) due to higher stock-based compensation ($28.6 million) and personnel costs.
- Sales & Marketing: Increased 12% ($17.9 million) driven by stock-based compensation and marketing activities.
- G&A: Increased 43% ($19.6 million) due to higher legal fees ($9.4 million) and stock-based compensation.
- Stock-Based Compensation: Total expense rose to $121.6 million (up from $72.4 million in 2025), significantly impacting net income.
- Acquisitions: Completed the acquisition of Pathway Medical Inc. in July 2025 for $36.3 million to enhance AI capabilities.
- Share Repurchases: Completed a $500 million repurchase program and initiated a new $500 million program in February 2026. Total repurchases in FY2026 were $431.7 million.
Guidance, Outlook, and Risks
- Outlook: Management expects revenue growth to continue but notes that growth rates may decline as the business matures. Investments in AI initiatives and cloud infrastructure are expected to continue, potentially pressuring margins in the near term.
- Key Risks:
- Customer Concentration: One customer accounted for 10% or more of total revenue in FY2026.
- Regulatory Environment: Uncertainty regarding federal policy initiatives (e.g., Most Favored Nation pricing) and evolving AI regulations could impact customer spending and compliance costs.
- Legal Proceedings: A securities class action lawsuit was settled for $31 million (covered by insurance). Derivative lawsuits remain pending. A separate lawsuit with OpenEvidence Inc. regarding AI platform access is ongoing.
- Competition: Intense competition from large tech companies (LinkedIn, Google) and specialized healthcare AI firms.
- Management Commentary: The company emphasizes its "physician-first" philosophy and the expansion of its Clinical AI Suite (Ask, Scribe, Dialer) as key drivers for future value creation.
Investor Verification Checklist
- Customer Concentration: Verify the identity and stability of the customer representing >10% of revenue.
- Stock-Based Compensation Trajectory: Assess the sustainability of the sharp increase in SBC ($121.6M) and its impact on future GAAP profitability.
- AI Adoption Metrics: Monitor the "Quarterly Unique Active Providers" metric (0.81M in FY2026) to validate the monetization potential of the Clinical AI Suite.
- Legal Settlements: Confirm the final court approval of the $31M securities settlement and monitor the status of derivative lawsuits and the OpenEvidence litigation.
- Share Repurchase Impact: Evaluate the remaining $492.5M authorization under the new buyback program and its effect on liquidity.