Doximity, Inc. — FY2022 Form 10-K summary
Reporting period: The filing covers the fiscal year ended March 31, 2022, not a standalone 2021 fourth quarter. The company’s fiscal year differs from the calendar year. All financial amounts below are in U.S. dollars.
Business context
Doximity operates a digital platform for U.S. medical professionals and sells Marketing, Hiring, and Telehealth solutions primarily to pharmaceutical companies and health systems. It reported more than 2 million medical professional members at year-end, including over 80% of U.S. physicians. Membership is free. The company reported one operating and reportable segment.
Financial and operating performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $343.5 million | $206.9 million |
| Gross profit / margin | $303.8 million / 88% | $175.7 million / 85% |
| Operating income / margin | $113.5 million / 33% | $53.3 million / 26% |
| Net income / margin | $154.8 million / 45% | $50.2 million / 24% |
| Adjusted EBITDA / margin (non-GAAP) | $150.3 million / 44% | $64.8 million / 31% |
| Cash from operating activities | $126.6 million | $83.0 million |
| Free cash flow (non-GAAP) | $120.9 million | $78.4 million |
Revenue increased 66% year over year; subscription revenue was $319.3 million, about 93% of total revenue. Management attributed most subscription growth to expansion among existing customers, including higher Marketing Solutions spending. Net revenue retention was 157%, versus 153% in FY2021. Customers contributing at least $100,000 of trailing-12-month revenue rose to 265 from 200.
The FY2022 net income included a $40.8 million income tax benefit, primarily related to excess tax benefits from stock option exercises and disqualifying dispositions following the June 2021 IPO. This benefit materially affected reported net income and margin. Stock-based compensation was $31.4 million, up from $7.3 million.
Balance sheet, liquidity, and cash flow
At March 31, 2022, cash and cash equivalents were $112.8 million and marketable securities were $685.3 million, totaling $798.1 million. Current assets were $904.1 million and current liabilities $111.3 million. The filing does not report outstanding borrowings or other financial debt. Management said existing cash and marketable securities should fund working capital and capital expenditures for at least 12 months.
Operating cash flow increased to $126.6 million. Investing activities used $640.6 million, mainly reflecting purchases of marketable securities, while financing activities provided $560.4 million, primarily from the IPO. Free cash flow is a company-defined non-GAAP measure. The securities portfolio had $20.5 million of gross unrealized losses at year-end; the company reported no credit losses and said it did not intend, and was not more likely than not required, to sell the securities before recovery or maturity.
Material changes, outlook, and risks
- Revenue growth moderated to 66% from 78% in FY2021. Gross and operating margins improved, while sales and marketing, R&D, and general and administrative expenses increased in dollars.
- The IPO raised approximately $548.5 million net of underwriting discounts, commissions, and deferred offering costs; preferred shares converted to Class B common stock.
- On April 1, 2022, Doximity closed the AMiON scheduling business acquisition for $53.5 million cash, with up to $24.0 million of earnout consideration over four years tied to performance milestones. The acquisition will be accounted for in FY2023.
- After year-end, the board authorized a stock repurchase program of up to $70 million over 12 months. Repurchases were authorized, not reported as completed in this filing.
- The filing gives no specific revenue or earnings guidance. Management expects continued investment in product, sales, marketing, and public-company compliance; it said gross margin should remain relatively steady in the near term, with quarterly fluctuations possible. Management cautioned that historical growth may not continue and growth rates are expected to decline.
- Key risks include customer retention and revenue concentration, competition, post-pandemic shifts in digital marketing and telehealth demand, hiring-market conditions, privacy and cybersecurity obligations, healthcare regulation, and execution of acquisitions. COVID-19 had not materially harmed results to date, but the company said future effects were uncertain.
- Other items to note: a six-year U.S. News partnership includes minimum payments of $9.1 million for its initial noncancelable three-year period; the company also entered a three-year web-hosting commitment of $5.2 million annually. The filing reported no legal contingencies considered material and no off-balance-sheet financing arrangements.
Important facts for investors to verify
- Confirm the fiscal-year reporting period and compare FY2022 with the appropriate annual period, rather than treating it as calendar Q4 2021.
- Assess the sustainability of subscription expansion and the 157% net revenue retention rate, including customer renewals and marketing-budget trends.
- Separate recurring operating performance from the unusually large tax benefit; review the company’s GAAP results alongside its non-GAAP adjusted EBITDA and free cash flow reconciliations.
- Review interest-rate exposure: the filing estimates a 100-basis-point rate increase would reduce the year-end market value of cash equivalents and marketable securities by $10.6 million.
- Track AMiON acquisition costs, earnout conditions, integration, and subsequent-period results, as well as any actual stock repurchases under the authorization.
- Consider customer and receivables concentration: no customer accounted for at least 10% of FY2022 revenue, but one marketing agency represented 17% of accounts receivable at year-end.
- Note that the financial statements were audited, but the auditor did not provide an opinion on internal control over financial reporting; Doximity was an emerging growth company.