Doximity stock plunges despite Q4 earnings and sales beat, margins up

Doximity reported fourth-quarter fiscal 2025 adjusted earnings per share (EPS) of 38 cents, which beat the Zacks Consensus Estimate of 27 cents by 40.7%. The company also reported earnings of 25 cents per share in the prior-year quarter.

Adjusted EPS for fiscal 2025 was $1.42, up 49.5% year over year.

DOCS registered GAAP net income per share of 31 cents, up from the year-ago quarter’s figure of 20 cents.

Revenue details of Doximity

Total revenues grew 17% to $138.3 million year over year. Sales beat the Zacks Consensus Estimate by 3.4%. The revenue growth was driven by subscription revenues of $131.9 million, up 17% year over year. DOCS’ unique active users on a quarterly, monthly, weekly and daily basis all hit fresh highs in the fiscal fourth quarter. The company’s workflow tools — telehealth, fax, scheduling and AI tools — also hit fresh highs during the quarter with over 620,000 unique active prescribers.

Total revenues in fiscal 2025 rose 20% year over year to $570.4 million. Subscription revenues totaled $543.8 million, up 21% year over year. The company’s net revenue retention rate was 119% on a trailing 12-month basis.

Following the earnings release, shares of DOCS plunged 20.7% during after-hours trading on May 15. The stock fell 9.5% year to date compared with a 6.2% decline in the industry. The broader S&P 500 Index has moved down 0.3% in the same period.

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Margin analysis of DOCS

Adjusted gross profit totaled $126.5 million, up 17.3% from the prior-year quarter’s level. Doximity reported an adjusted gross margin (as a percentage of revenues) of 91.4%, up almost 10 basis points (bps) year over year.

Research and development expenses totaled $24.8 million, up 23.1% year over year. Sales and marketing expenses totaled $37.6 million, up 12.2%. General and administrative expenses totaled $37.6 million, up 27.6%.

The company reported total adjusted operating income of $68 million, up 23.7% from the prior-year period’s recorded number. Adjusted operating margin (as a percentage of revenues) was 49.1%, up 260 bps year over year.  

Financial position of Doximity

DOCS exited the fiscal fourth quarter with cash, cash equivalents, and marketable securities worth $915.7 million compared with $844.9 million in the third quarter of fiscal 2025.

Total assets amounted to $1.26 billion, up sequentially from $1.17 billion.

DOCS’ fiscal 2026 guidance

Doximity issued its outlook for fiscal 2026 revenues. The company expects revenues to be between $619 million and $631 million. The Zacks Consensus Estimate was pegged at $627 million.

DOCS expects first-quarter fiscal 2026 sales to be in the range of $139-$140 million. The Zacks Consensus Estimate was pinned at $142.3 million.

Doximity, Inc. price, consensus and EPS surprise

Doximity, Inc. price-consensus-eps-surprise-chart | Doximity, Inc. Quote

Wrapping up

Doximity's fiscal fourth-quarter sales and earnings beat estimates, but sales guidance for the first quarter of fiscal 2026 fell short of estimates. However, Platform engagement hit record highs across all user metrics, led by the Newsfeed and growing adoption of AI tools, which rose 5x year over year. Over 620,000 prescribers used Doximity’s workflow tools, including telehealth, fax and scheduling features. AI features, such as document analysis and clinical summarization, central to Doximity GPT, gained traction among physicians.

Doximity is investing heavily in AI to enhance both clinician tools and pharma client solutions. The company’s integrated programs are improving ROI and predictability, while its client portal offers real-time performance and targeting insights.

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