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Doximity, Inc. (DOCS)·Q3 2025 Earnings Summary

Executive Summary

  • Strong “beat-and-raise” quarter: revenue $168.6M (+25% y/y), adjusted EBITDA $102.0M (+39% y/y), with record 61% adj. EBITDA margin; management characterized results as “a 10% beat [vs high end of guidance], a 5% raise and 61% margins” .
  • FY25 guidance raised again: revenue to $564.6–$565.6M and adj. EBITDA to $306.6–$307.6M; Q4 guide set at revenue $132.5–$133.5M and adj. EBITDA $62.5–$63.5M .
  • Engagement and product traction accelerated: 1.0M+ unique prescribers in newsfeed; 610k+ unique workflow users; 1.8M AI prompts in Q3 (+60% q/q); point‑of‑care/formulary grew >100% y/y and were ~20% of pharma sales; integrated multi‑module programs drove larger deal sizes .
  • Setup into FY26: faster January launches pulled revenue recognition forward, aiding Q4/FY25 but creating tougher comps next year; management expects outperformance vs. market to normalize toward ~2x growth (vs. ~3x in FY25) .

What Went Well and What Went Wrong

  • What Went Well

    • “10% beat, 5% raise, and 61% margins”: revenue $168.6M and adj. EBITDA $102.0M with record 61% adj. EBITDA margin; management emphasized operating leverage on upside .
    • Product and commercial momentum: point‑of‑care and formulary grew >100% y/y and were ~20% of pharma sales; integrated multi‑module programs expanded deal sizes; first ever $15M+ brand and four $10M+ brands .
    • Engagement/AI traction: 1.0M+ unique prescribers on newsfeed; 610k+ unique workflow users; 1.8M AI prompts (+60% q/q). “Our AI tools grew the fastest last quarter” .

  • What Went Wrong

    • Mix/seasonality shift: more January program launches convert upfronts to revenue earlier, adding “a couple of points” to FY25 but implying tougher FY26 comps; management cautioned to model annual margins (not the 61% one‑off Q3 level) .
    • Provider/health systems still soft: health system business only “marginally” better; macro uncertainty persists; pharma HCP digital market growth ~5–7% limits end‑market tailwind .
    • Higher stock‑based comp (SBC): SBC rose to $19.4M in Q3 (vs. $11.8M y/y), a headwind to GAAP opex; non‑GAAP excludes SBC per policy .

Financial Results

  • Quarterly performance vs prior quarters (oldest → newest)
MetricQ1 FY25 (Jun 30, 2024)Q2 FY25 (Sep 30, 2024)Q3 FY25 (Dec 31, 2024)
Revenue ($M)$126.7 $136.8 $168.6
GAAP Diluted EPS ($)$0.21 $0.22 $0.37
Non‑GAAP Diluted EPS ($)$0.28 $0.30 $0.45
Adjusted EBITDA ($M)$65.9 $76.1 $102.0
Adjusted EBITDA Margin (%)52.0% 55.7% 60.5%
GAAP Net Income ($M)$41.4 $44.2 $75.2
GAAP Net Income Margin (%)32.7% 32.3% 44.6%
GAAP Gross Margin (%)89.3% 90.0% 91.6%
Non‑GAAP Gross Margin (%)91.6% 91.9% 93.3%
Cash from Operations ($M)$41.2 $68.3 $65.2
Free Cash Flow ($M)$39.5 $66.8 $63.4
  • Q3 actual vs company guidance (for additional context)
MetricPrior Guidance RangeQ3 ActualOutcome
Revenue ($M)$152–$153 (Q3 guide as of Nov. 7, 2024) $168.6 Beat; CEO: ~10% above high end
Adjusted EBITDA ($M)$83–$84 (Q3 guide as of Nov. 7, 2024) $102.0 Beat; CFO: ~+$19M vs guide
  • KPIs (engagement and customers)
KPIQ1 FY25Q2 FY25Q3 FY25
Unique workflow users590k+ 600k+ 610k+
Unique prescribers in newsfeed——1.0M+
AI prompts (quarter)——1.8M (+60% q/q)
Net revenue retention (TTM, total)——117%
NRR (Top 20 customers, TTM)——122% (i.e., +22% y/y)
Customers ≥$500k TTM——114 (84% of revenue)

Notes: “—” denotes not disclosed in those quarters in the materials reviewed.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q4 FY25—$132.5–$133.5 New
Adjusted EBITDA ($M)Q4 FY25—$62.5–$63.5 New
Revenue ($M)FY25$535–$540 (as of Q2) $564.6–$565.6 Raised
Adjusted EBITDA ($M)FY25$274–$279 (as of Q2) $306.6–$307.6 Raised

Management also framed the raise: FY25 revenue +$28M and adj. EBITDA +$31M at midpoints, after Q3 outperformance .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1, Q2)Current Period (Q3)Trend
AI/technology initiativesQ1: record 590k workflow users across AI/telehealth/messaging/scheduling ; Q2: record 600k workflow users 1.8M AI prompts (+60% q/q); doctors see material time savings; applied AI use cases proliferating Up
Product performance (point‑of‑care, formulary, video)Limited disclosure in Q1/Q2 filingsPoint‑of‑care & formulary >100% y/y; ~20% of pharma sales; vertical video “having its moment” in a regulated S‑curve adoption Up
Client portal & agenciesPrior references not detailed in filings>50% of brand clients on portal; higher growth among portal clients; 10 agency partners onboarded; training summit set Up
Market/macro—Pharma HCP digital market growing ~5–7%; DOCS outperformed ~3x in CY24; expects ~2x longer term Mixed (share gains strong; market steady)
Regulatory/legal (DTC/IRA)—Too early for DTC restrictions; IRA impact skewed to late‑stage drugs; minimal direct near‑term exposure Monitor
Health systems—Marginal improvement; macro uncertainty persists; pharma remains fastest‑growing business Stabilizing

Management Commentary

  • Strategic positioning and beat/raise: “So that's the 3 financial highlights: a 10% beat, a 5% raise and 61% margins” .
  • Engagement and AI: “For the first time ever in Q3, more than 1 million of unique active prescribers scrolled our feed… Our AI tools grew the fastest… over 1.8M prompts, up 60% over the prior quarter” .
  • Integrated programs and portal: “Modules outside the newsfeed grew >100%… generating over 20% of pharma sales… our client portal… over half of our brand clients have access… adding agencies… 10 as portal partners” .
  • Profitability discipline: “Almost all of that [Q3 upsell] outperformance flows through… don’t take that one quarter and think we’re a 60%+ margin business now… look at annual EBITDA margin (54% for this fiscal year)” .
  • Visibility and seasonality: “Higher percentage of January launches… more of our upfront sales will be recognized as revenue in the current fiscal year… could lead to some tougher comps as we move ahead to fiscal ’26” .

Q&A Highlights

  • Portal vs. non‑portal clients: Higher growth among portal clients; plan to roll out to all clients in 2025; portal integrates third‑party Rx data for ROI transparency .
  • Margin sustainability: Q3 61% adj. EBITDA margin is not the new run‑rate; model full‑year margin (~54% guide) to reflect quarterly variability .
  • Integrated programs and January launches: Multimodule contracts start with first pre‑approved content, accelerating speed‑to‑launch and pulling forward revenue into Q4/FY25 .
  • Product runway: Point‑of‑care/formulary consecutive 100%+ y/y growth; management sees workflow modules potentially on par with newsfeed over 3–5 years .
  • Market growth/share: Pharma HCP digital market ~5–7%; DOCS likely grew ~3x the market in CY24; expects long‑term ~2x outperformance; “flight to quality” noted .
  • Health systems: Slight improvement, but still macro‑affected; pharma remains primary growth driver .

Estimates Context

  • We attempted to retrieve S&P Global (Capital IQ) Wall Street consensus for Q3 FY25, but the request hit the daily API limit, so consensus data is unavailable in this report. As a result, we do not present “vs. consensus” comparisons here [GetEstimates error].
  • Relative to company guidance, DOCS delivered a significant beat: Q3 revenue $168.6M vs. prior Q3 guide $152–$153M (CEO cited ~10% above the high end), and adj. EBITDA $102.0M vs. $83–$84M guide (CFO cited ~+$19M) .

Key Takeaways for Investors

  • Beat‑and‑raise with record profitability: robust demand and operating leverage drove a notable upside quarter and higher FY25 outlook, a likely positive catalyst for sentiment .
  • Integrated multi‑module programs and the client portal are scaling deal sizes and accelerating launches; these appear to be core drivers of share gains vs. a ~5–7% market backdrop .
  • Workflow monetization is working: point‑of‑care/formulary >100% y/y and ~20% of pharma sales; management sees workflow modules reaching parity with newsfeed over 3–5 years .
  • Engagement and AI momentum strengthen the moat: 1.0M+ prescribers in newsfeed, 610k+ workflow users, and rapid AI adoption (1.8M prompts), reinforcing user‑time share and monetization options .
  • Model prudently into FY26: earlier revenue recognition (January launches) boosts FY25 but creates tougher comps; management guides investors to annual margin levels (~54%) rather than Q3’s 61% .
  • Competitive validation: Doximity Dialer ranked #1 Best in KLAS for the 4th straight year, underscoring product quality with health systems .
  • Watch list: health system recovery trajectory, regulatory/DTC developments, and the cadence of portal rollout and agency expansion as leading indicators .

Appendix: Additional Disclosures and Non‑GAAP Policy

  • Non‑GAAP definitions and reconciliations (gross profit/margin, operating income, net income/margin, EPS, adjusted EBITDA/margin, free cash flow) are provided in the Q3 8‑K/press release .
  • Cash returns: the cash flow statement shows $19.3M of share repurchases in Q3; remaining program authorization stood at $451M as of 12/31 per management .