Interactivity Service Line 05 Awareness PeerPeer Service Line 02 Interactivity Peer Awareness Manufacturer Health System 1 Land Initial Brands or Service Lines 2 Expand to Add'l Brands or Service Lines 3 Expand Number & Type of Modules Utilized Awareness Build brand equity and communicate key messages doximity (1) (2) (3) Proprietary & Confidential Est. Share of Total HCP Marketing Budgets1 >50% 20-50% 5-20% <5% No Revenue Q1 KEY METRICS 13 Adj. EBITDA & Margin1,2 Proprietary 1/3+ IN R&D1 Dr. Nate Gross CSO ...

Doximity, Inc. (NYSE:DOCS) Q1 2024 Earnings Conference Call August 8, 2023 5:00 PM ET Company Participants Perry Gold - VP of IR Jeffrey Tangney - Co-Founder and CEO Anna Bryson - CFO Nate Gross - Co-Founder and CSO Conference Call Participants Brian Peterson - Raymond James Scott Berg - Needham & Company Sandy Draper - Guggenheim Securities Jared Hasson - William Blair Allen Lutz - Bank of America Jessica Tassan - Piper Sandler Elizabeth Anderson - Evercore ISI Jailendra Singh - Truist Securities David Lar ...

Part I—Financial Information [Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents Doximity's unaudited condensed consolidated financial statements, highlighting a **20% revenue increase** and significant net income growth [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (as of June 30, 2023 vs. March 31, 2023) | Metric | June 30, 2023 ($M) | March 31, 2023 ($M) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $306.7 | $158.0 | | Total current assets | $989.7 | $975.5 | | Total assets | $1,153.5 | $1,136.9 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $132.7 | $139.5 | | Total liabilities | $162.7 | $170.8 | | Total stockholders' equity | $990.8 | $966.1 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations Summary (Three Months Ended June 30) | Metric | 2023 ($M) | 2022 ($M) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $108.5 | $90.6 | +19.7% | | Gross Profit | $95.3 | $77.6 | +22.8% | | Income from operations | $29.7 | $21.7 | +36.9% | | Net income | $28.4 | $22.4 | +26.8% | | Diluted EPS | $0.13 | $0.10 | +30.0% | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Three Months Ended June 30) | Metric | 2023 ($M) | 2022 ($M) | | :--- | :--- | :--- | | Net cash provided by operating activities | $57.2 | $44.8 | | Net cash provided by (used in) investing activities | $117.3 | $(41.5) | | Net cash used in financing activities | $(25.8) | $(6.0) | - The significant increase in cash from investing activities in Q1 2023 was driven by **$116.6 million** in maturities of marketable securities, compared to only **$8.3 million** in the prior year period[26](index=26&type=chunk) - Cash used in financing activities increased primarily due to higher common stock repurchases (**$21.8M** in 2023 vs. **$8.9M** in 2022) and a **$5.4M** payment for contingent consideration related to the AMiON acquisition[26](index=26&type=chunk)[180](index=180&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company's revenue is primarily derived from subscription-based Marketing Solutions and Hiring Solutions sold to pharmaceutical companies and health systems[28](index=28&type=chunk)[38](index=38&type=chunk) - Subscription revenue for the three months ended June 30, 2023, was **$101.3 million**, a significant increase from **$83.7 million** in the same period of 2022[51](index=51&type=chunk) - On August 8, 2023, the company announced a plan to reduce its workforce by approximately **100 employees** (**10%** of total), estimating charges of **$8-10 million**, primarily consisting of severance and stock-based compensation[120](index=120&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting **20% revenue growth** to **$108.5 million**, key metrics, liquidity, and capital resources [Key Business and Financial Metrics](index=30&type=section&id=Key%20Business%20and%20Financial%20Metrics) - The number of customers with trailing 12-month subscription revenue greater than **$100,000** increased to **296** from **264** year-over-year[129](index=129&type=chunk) - The net revenue retention rate was **118%** for the trailing 12 months ended June 30, 2023, compared to **139%** for the same period in 2022[131](index=131&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP Financial Highlights (Three Months Ended June 30) | Metric | 2023 ($M) | 2022 ($M) | | :--- | :--- | :--- | | Adjusted EBITDA | $46.6 | $33.5 | | Adjusted EBITDA Margin | 43% | 37% | | Free Cash Flow | $55.6 | $42.6 | [Results of Operations](index=35&type=section&id=Results%20of%20Operations) - Revenue increased by **$17.8 million** (**20%**) YoY, primarily driven by a **$17.5 million** increase in subscription revenue, with **$12.8 million** from existing customer expansion[158](index=158&type=chunk) - Gross margin improved to **88%** from **86%** YoY, as revenue growth outpaced the growth in cost of revenue[159](index=159&type=chunk)[160](index=160&type=chunk) - Sales and marketing expenses rose **22%** to **$34.5 million**, mainly due to a **$2.9 million** increase in stock-based compensation and a **$1.8 million** increase in personnel-related costs from headcount growth[162](index=162&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2023, the company's principal sources of liquidity were cash, cash equivalents, and marketable securities totaling **$873.2 million**[168](index=168&type=chunk) - The Board of Directors authorized a new **$200 million** stock repurchase program on June 1, 2023, with **$232.9 million** remaining available under all authorized programs as of June 30, 2023[170](index=170&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Discusses market risk, primarily interest rate fluctuations impacting the marketable securities portfolio, with no material foreign currency or inflation impact - The company's investments are exposed to market risk from interest rate fluctuations; a hypothetical **100 basis point** increase would decrease market value by **$3.7 million** as of June 30, 2023[186](index=186&type=chunk)[187](index=187&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[189](index=189&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[190](index=190&type=chunk) Part II—Other Information [Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings that would materially affect its financial position or operations - The company is not aware of any legal matters that would individually or in aggregate have a material effect on its results of operations, financial position, or cash flows[111](index=111&type=chunk)[193](index=193&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended March 31, 2023 - The report states there have been no material changes to the risk factors included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2023[194](index=194&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details share repurchase activity, including **663,574 shares** repurchased and a new **$200 million** program, with no material change in IPO proceeds use Share Repurchases (Three Months Ended June 30, 2023) | Period | Total Shares Repurchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | April 2023 | 123,086 | $31.89 | | May 2023 | 259,373 | $31.62 | | June 2023 | 281,115 | $31.90 | | **Total** | **663,574** | | - On June 1, 2023, the board authorized an additional program to repurchase up to **$200 million** of Class A common stock over 24 months[196](index=196&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20Other%20Information) Post-quarter, the company announced a **10% workforce reduction** with **$8-10 million** charges, and an SVP adopted a Rule 10b5-1 trading plan - On August 8, 2023, the company announced a plan to reduce its workforce by approximately **100 employees**, with estimated charges of **$8-10 million** expected primarily in the second quarter of fiscal 2024[200](index=200&type=chunk) - On May 26, 2023, Craig Overpeck, SVP of Commercial Operations, adopted a Rule 10b5-1 trading plan for the sale of **9,500 shares** of common stock[201](index=201&type=chunk)

Part I [Business](index=7&type=section&id=Item%201.%20Business) Doximity operates a leading digital platform for U.S. medical professionals, generating revenue from subscription-based Marketing, Hiring, and Telehealth solutions - Doximity is the leading digital platform for U.S. medical professionals, with over two million members as of March 31, 2023, including more than **80% of U.S. physicians**, over **50% of nurse practitioners and physician assistants**, and over **90% of graduating medical students**[18](index=18&type=chunk) - The business model provides free tools for medical professionals while generating revenue from customers like pharmaceutical manufacturers and health systems through three main solution categories: **Marketing, Hiring, and Telehealth**[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - The company's growth strategy includes expanding its member network, innovating its platform, increasing sales to existing customers, attracting new customers, monetizing telehealth solutions, and pursuing strategic acquisitions[50](index=50&type=chunk) - On April 1, 2022, Doximity acquired **AMiON**, a shift scheduling service, to further expand its physician cloud platform[47](index=47&type=chunk)[50](index=50&type=chunk) [Overview and Tools for Medical Professionals](index=7&type=section&id=Item%201.%20Business%23Overview) Doximity's platform offers U.S. clinicians a professional network, AI-powered newsfeed, and HIPAA-compliant productivity tools like Dialer for enhanced patient care and collaboration - The platform provides members with a professional network for connectivity, a personalized newsfeed for medical information, and a suite of productivity tools[19](index=19&type=chunk) - The Newsfeed uses **AI** to deliver personalized content, including medical articles and videos, and automatically tracks eligible **Continuing Medical Education (CME) credits** for members[29](index=29&type=chunk)[30](index=30&type=chunk) - Productivity tools are **HIPAA-compliant** and include **Dialer** for voice and video calls, secure messaging, and digital fax/eSignature capabilities to streamline clinical workflows[32](index=32&type=chunk)[35](index=35&type=chunk) [Solutions for Healthcare Customers](index=9&type=section&id=Item%201.%20Business%23Solutions) Doximity provides subscription-based Marketing, Hiring, and Telehealth solutions to pharmaceutical manufacturers, health systems, and medical recruiting firms, including the AMiON shift scheduling service - Marketing Solutions enable pharmaceutical and health system customers to serve members with tailored sponsored content, categorized into **Awareness, Interactivity, and Peer** modules[34](index=34&type=chunk)[35](index=35&type=chunk)[45](index=45&type=chunk) - Hiring Solutions offer digital recruiting capabilities through job posts and direct messaging subscriptions, supplemented by a tech-enabled, higher-touch service called **Curative Talent**[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Telehealth Solutions include **Dialer Enterprise**, a subscription-based telehealth tool for health systems, which builds on the organic adoption of the free Dialer tool used by individual members[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - The acquisition of **AMiON** on April 1, 2022, added a shift scheduling service for health systems to the company's offerings[47](index=47&type=chunk) [Competition](index=13&type=section&id=Item%201.%20Business%23Competition) Doximity faces competition across member engagement, marketing, hiring, and telehealth segments from large tech companies, specialized healthcare platforms, and staffing firms - Competes for members with large tech companies like **LinkedIn, Facebook, and Google**[60](index=60&type=chunk) - Competes for marketing budgets with outlets like **WebMD's Medscape**[60](index=60&type=chunk) - Competes for hiring budgets with healthcare staffing companies and job boards[60](index=60&type=chunk) - Competes for telehealth budgets with dedicated services like **Teladoc and Amwell**, and communication platforms like **Zoom and Microsoft Teams**[60](index=60&type=chunk) [Data Protection, Security, and Regulatory Compliance](index=14&type=section&id=Item%201.%20Business%23Regulation) Doximity is subject to complex data privacy and healthcare regulations, including HIPAA, CCPA/CPRA, and TCPA, requiring strict compliance and robust data protection measures - The company is a **"business associate" under HIPAA** and is subject to its privacy and security rules, with potential for civil and criminal penalties for violations[70](index=70&type=chunk)[71](index=71&type=chunk) - Doximity is also subject to various state privacy laws, such as the **California Consumer Privacy Act (CCPA)** and **California Privacy Rights Act (CPRA)**, which may be more restrictive than HIPAA[72](index=72&type=chunk) - The company's communication tools may be subject to federal and state laws like the **Telephone Consumer Protection Act (TCPA)**[73](index=73&type=chunk) - Data is protected with measures including **Web Application Firewalls, Bot Protection, DDoS mitigation, and encryption** (TLS 1.2 in transit, AES-256 for PHI at rest)[69](index=69&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including operational challenges, intense competition, stringent data privacy regulations, technology dependence, and concentrated voting control due to its dual-class stock structure - Failure to effectively manage growth, retain members, or attract and retain customers could significantly harm the business[88](index=88&type=chunk)[94](index=94&type=chunk)[98](index=98&type=chunk) - Revenue is relatively concentrated, and the loss of key customers could slow growth or cause revenue to decline[101](index=101&type=chunk) - The business is subject to stringent and changing data privacy laws (e.g., **HIPAA, CCPA**), and a failure to comply or a security breach could result in significant fines, liability, and reputational harm[123](index=123&type=chunk)[125](index=125&type=chunk)[136](index=136&type=chunk) - The **dual-class stock structure** concentrates approximately **86% of voting power** with executive officers and directors, limiting the influence of Class A stockholders on corporate matters[87](index=87&type=chunk)[230](index=230&type=chunk) [Unresolved Staff Comments](index=46&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[245](index=245&type=chunk) [Properties](index=46&type=section&id=Item%202.%20Properties) Doximity's corporate headquarters is a leased 9,197 square foot space in San Francisco, with additional leased office space in Irving, Texas - The corporate headquarters is approximately **9,197 square feet** of leased space in San Francisco, CA, with the lease expiring at the end of **2023**[246](index=246&type=chunk) - The company also leases office space in Irving, Texas and does not own any real property[246](index=246&type=chunk) [Legal Proceedings](index=47&type=section&id=Item%203.%20Legal%20Proceedings) Information on legal proceedings is detailed in Note 14—Commitments and Contingencies of the financial statements - Information on legal proceedings is detailed in **Note 14—Commitments and Contingencies**[248](index=248&type=chunk) [Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - None[249](index=249&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=48&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Doximity's Class A common stock trades on the NYSE, with no cash dividends paid, and the company repurchased **$16.0 million** in shares during fiscal 2023 - Class A common stock is listed on the NYSE under the symbol **"DOCS"**, trading since **June 24, 2021**. There is no public market for Class B common stock[251](index=251&type=chunk) - The company has never paid cash dividends and does not expect to in the foreseeable future, intending to retain earnings for business expansion[253](index=253&type=chunk) Share Repurchases (Q4 FY2023) | Period | Total Number of Shares Repurchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) | | :--- | :--- | :--- | :--- | | January 1 - 31, 2023 | — | $ — | $ 70.0 | | February 1 - 28, 2023 | — | $ — | $ 70.0 | | March 1 - 31, 2023 | 523,647 | $ 30.59 | $ 54.0 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2023, Doximity's revenue grew **22%** to **$419.1 million**, with net income decreasing due to a prior-year tax benefit, while maintaining strong liquidity and customer retention FY2023 vs. FY2022 Financial Performance | Metric | FY 2023 | FY 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $419.1M | $343.5M | +$75.5M | +22% | | Gross Profit | $365.6M | $303.8M | +$61.8M | +20% | | Income from Operations | $125.1M | $113.5M | +$11.6M | +10% | | Net Income | $112.8M | $154.8M | -$42.0M | -27% | | Adjusted EBITDA | $184.0M | $150.3M | +$33.7M | +22% | Key Business Metrics | Metric | March 31, 2023 | March 31, 2022 | March 31, 2021 | | :--- | :--- | :--- | :--- | | Customers with at least $100,000 of revenue | 294 | 254 | 188 | | Net revenue retention rate | 117% | 157% | 153% | - The **22% revenue growth** in FY2023 was primarily driven by a **$70.4 million** increase in subscription revenue, with **$55.1 million** from existing customer expansion and **$15.3 million** from new customers[288](index=288&type=chunk) - The company maintains strong liquidity with **$841.0 million** in cash, cash equivalents, and marketable securities as of March 31, 2023[299](index=299&type=chunk) [Results of Operations (FY2023 vs FY2022)](index=56&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Results) In FY2023, revenue grew **22%** to **$419.1 million**, while increased operating expenses and a shift from a tax benefit to a tax provision led to a decrease in net income Revenue Breakdown FY2023 vs FY2022 | Category | FY 2023 (in millions) | FY 2022 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $419.1 | $343.5 | $75.5 | 22% | Operating Expenses FY2023 vs FY2022 | Category | FY 2023 (in millions) | FY 2022 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | Research & Development | $80.2 | $62.4 | $17.8 | 29% | | Sales & Marketing | $123.5 | $92.1 | $31.4 | 34% | | General & Administrative | $36.7 | $35.7 | $1.0 | 3% | - The provision for income taxes was an expense of **$20.3 million** in FY2023, compared to a benefit of **$40.8 million** in FY2022. This change was primarily due to a decrease in tax deductions from stock option activities[296](index=296&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Liquidity) As of March 31, 2023, Doximity held **$841.0 million** in cash and marketable securities, with strong operating cash flow and ongoing share repurchase programs - Principal sources of liquidity as of March 31, 2023, were cash and cash equivalents and marketable securities totaling **$841.0 million**[299](index=299&type=chunk) - The company authorized two separate **$70.0 million** share repurchase programs. The first was completed in September 2022. Under the second program, authorized in October 2022, the company repurchased **$16.0 million** of stock, with **$54.0 million** remaining as of March 31, 2023[301](index=301&type=chunk)[302](index=302&type=chunk) Cash Flow Summary (in millions) | Cash Flow Activity | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $179.6 | $126.6 | | Net cash used in investing activities | $(59.9) | $(640.6) | | Net cash (used in) provided by financing activities | $(74.5) | $560.4 | [Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate fluctuations, potentially impacting its **$841.0 million** investment portfolio, and the potential future effects of inflation - The company is exposed to interest rate risk on its portfolio of cash, cash equivalents, and marketable securities, which totaled **$841.0 million** as of March 31, 2023[337](index=337&type=chunk)[299](index=299&type=chunk) - A hypothetical **100 basis point increase** in interest rates would have resulted in a **$5.0 million decrease** in the market value of cash equivalents and marketable securities as of March 31, 2023[338](index=338&type=chunk) - The company does not believe inflation has had a material effect on its business to date[339](index=339&type=chunk) [Financial Statements and Supplementary Data](index=65&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements, including the auditor's report highlighting critical audit matters like revenue recognition and AMiON intangible asset valuation - The independent auditor's report identified two critical audit matters: (1) **Revenue Recognition** for subscription contracts, focusing on the evaluation of contract terms to determine the pattern of recognition, and (2) the valuation of the **customer relationships intangible asset** acquired in the **AMiON** business combination[347](index=347&type=chunk)[348](index=348&type=chunk)[350](index=350&type=chunk) Consolidated Balance Sheet Highlights (as of March 31, 2023) | Account | Amount (in millions) | | :--- | :--- | | **Assets** | | | Cash and cash equivalents | $158.0 | | Marketable securities | $683.0 | | Total Assets | $1,136.9 | | **Liabilities & Equity** | | | Total Liabilities | $170.8 | | Total Stockholders' Equity | $966.1 | | Total Liabilities and Stockholders' Equity | $1,136.9 | Consolidated Statement of Operations Highlights (for Fiscal Year Ended March 31, 2023) | Account | Amount (in millions) | | :--- | :--- | | Revenue | $419.1 | | Gross Profit | $365.6 | | Income from Operations | $125.1 | | Net Income | $112.8 | | Diluted EPS | $0.53 | [Controls and Procedures](index=106&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of March 31, 2023, with no material changes during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of **March 31, 2023**[550](index=550&type=chunk) - Management's report concluded that internal control over financial reporting was effective as of **March 31, 2023**, and this assessment was audited by the independent registered public accounting firm[553](index=553&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended **March 31, 2023**[551](index=551&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=107&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the **2023 Annual Meeting of Stockholders**[556](index=556&type=chunk) [Executive Compensation](index=107&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the **2023 Annual Meeting of Stockholders**[558](index=558&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=107&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership by beneficial owners and management is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the **2023 Annual Meeting of Stockholders**[559](index=559&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=107&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the **2023 Annual Meeting of Stockholders**[560](index=560&type=chunk) [Principal Accountant Fees and Services](index=107&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the **2023 Annual Meeting of Stockholders**[561](index=561&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=108&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Annual Report, including corporate governance documents, material contracts, and certifications - Lists all exhibits filed with the Annual Report, including the **Amended and Restated Certificate of Incorporation, bylaws, equity incentive plans, and CEO/CFO certifications**[563](index=563&type=chunk) [Form 10-K Summary](index=110&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that no Form 10-K summary is provided - None[566](index=566&type=chunk)

Financial Data and Key Metrics Changes - For the full fiscal year, the company reported revenue of $419 million, representing a 22% year-on-year growth [95] - The adjusted EBITDA for Q4 was $48.9 million, with an adjusted EBITDA margin of 44%, compared to $39.4 million and a 42% margin in the prior year [109] - The company generated free cash flow of $173.4 million for the full fiscal year, an increase of 43% year-over-year [132] Business Line Data and Key Metrics Changes - Subscription revenue, which comprises 93% of total revenue, grew by 20% in Q4, up from 18% in Q3 [127] - The company ended the year with 294 customers contributing at least $100,000 each in subscription-based revenue, a 16% increase from the previous year [128] - Curative, the only non-subscription part of the business, saw flat growth year-over-year due to tough comparisons from the previous year [26] Market Data and Key Metrics Changes - The company reported a net revenue retention rate of 124% for its top 20 customers [127] - The overall pharma ETF in the US was down only 5% for the year, indicating a relatively stable market environment [138] - The company noted that 65% of its annual subscription revenue guidance is already under contract, which is higher than typical for this time of year [119] Company Strategy and Development Direction - The company is focusing on integrating new products and enhancing its physician cloud offerings, with a strong emphasis on R&D and sales and marketing investments [18][99] - The introduction of DocsGPT, an AI medical writing tool, is expected to significantly improve workflow efficiency for physicians [122][70] - The company plans to continue its strategy of opportunistic pricing for new products as ROI studies are generated [60] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding upsell expectations due to macroeconomic uncertainties, preparing for a potentially tougher year [119][137] - The company remains optimistic about the engagement and ROI data from new products, which are expected to contribute to growth in the coming years [113] - Management highlighted the importance of maintaining margins while continuing to invest in growth opportunities [19] Other Important Information - The company repurchased $86 million of its own stock during the fiscal year, reflecting confidence in its long-term value [97] - The company is set to host its inaugural Investor Day on June 6th, where it will showcase new products and discuss long-term financial targets [104][125] - The company has received regulatory approvals for most of its new vertical video products, with launches expected in the coming quarters [134] Q&A Session Summary Question: What is the revenue contribution from new products? - Management indicated that subscription revenue growth reaccelerated to 20% in Q4, suggesting new products are contributing positively [6] Question: Can you provide an update on the hospital market? - Management reported strong engagement in the hospital market, with over 38,000 unique active providers using their telehealth tools [32] Question: What are the expectations for deferred revenue growth? - Management cautioned that while deferred revenue is up, it should not be heavily weighted as a metric due to milestone-based billing practices [23][170] Question: How is the competitive landscape evolving? - Management noted no major changes in competition, emphasizing the strength of their physician network amidst digital privacy regulations [165] Question: What are the expectations for gross margin and EBITDA? - Management expects gross margin and adjusted EBITDA margins to remain similar to the previous year, reflecting stable operational performance [66]

Doximity, Inc. (NYSE:DOCS) Q3 2023 Earnings Conference Call February 9, 2023 5:00 PM ET Company Participants Perry Gold - Head of IR Jeffrey Tangney - Co-Founder & CEO Anna Bryson - CFO Nate Gross - Co-Founder & Chief Scientific Officer Conference Call Participants Brian Peterson - Raymond James Scott Berg - Needham & Company Sandy Draper - Guggenheim Stan Berenshteyn - Wells Fargo Securities Richard Close - Canaccord Genuity Ryan Daniels - William Blair Elizabeth Anderson - Evercore Jessica Tassan - Piper ...

FORM 10-Q _________________________________________________________________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 For the quarterly period ended December 31, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number ...

Doximity, Inc. (NYSE:DOCS) Q2 2023 Earnings Conference Call November 10, 2022 17:00 ET Company Participants Perry Gold - Head of Investor Relations Jeff Tangney - Co-Founder & Chief Executive Officer Anna Bryson - Chief Financial Officer <p style="margin-top:0in;margin-right:0in;margin-bottom:12.75pt;margin-left: 0in;font-variant-ligatures: normal;font-variant-caps: normal;orphans: 2; text-align:start;widows: 2;-webkit-text-stroke-width: 0px;text-decoration-thickness: initial; text-deco ...

Table of Contents Title of each class Trading Symbol(s) Name of exchange on which registered DOCS The New York Stock Exchange Class A common stock, $0.001 par value per share UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _________________________________________________________________________________________________________________ FORM 10-Q _________________________________________________________________________________________________________________ (Mark One) ☒ QUARTERLY REPO ...

Part I—Financial Information [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Doximity's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, with detailed notes on business and accounting policies [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2022 | March 31, 2022 | | :--- | :--- | :--- | | Total assets | $1,050,931 | $991,357 | | Total liabilities | $148,765 | $112,763 | | Total stockholders' equity | $902,166 | $878,594 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Revenue | $90,639 | $72,669 | | Gross profit | $77,562 | $64,683 | | Income from operations | $21,682 | $24,875 | | Net income | $22,383 | $26,322 | | Net income per share (Basic) | $0.12 | $0.12 | | Net income per share (Diluted) | $0.10 | $0.09 | [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net income | $22,383 | $26,322 | | Change in unrealized loss on available-for-sale-securities, net of tax | $(2,631) | $(48) | | Comprehensive income | $19,752 | $26,274 | [Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity) Changes in Stockholders' Equity (in thousands) | Metric | Balance as of March 31, 2022 | Balance as of June 30, 2022 | | :--- | :--- | :--- | | Class A and Class B Common Stock Amount | $192 | $193 | | Additional Paid-In Capital | $702,589 | $715,282 | | Accumulated Other Comprehensive Loss | $(15,294) | $(17,925) | | Retained Earnings | $191,107 | $204,616 | | Total Stockholders' Equity | $878,594 | $902,166 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $44,752 | $33,175 | | Net cash used in investing activities | $(41,500) | $(57,423) | | Net cash provided by (used in) financing activities | $(5,969) | $552,176 | | Net increase (decrease) in cash and cash equivalents | $(2,717) | $527,928 | | Cash and cash equivalents, end of period | $110,092 | $594,321 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Description of Business](index=13&type=section&id=1.%20Description%20of%20Business) - Doximity, Inc. provides an online platform for physicians and healthcare professionals to collaborate, coordinate patient care, access medical news, and manage careers. Its primary customers are pharmaceutical companies and health systems utilizing digital Marketing and Hiring Solutions[36](index=36&type=chunk) - In June 2021, the Company completed its Initial Public Offering (IPO), issuing **22,505,750 shares** of Class A common stock at **$26.00 per share**, generating **$548.5 million** in proceeds after deducting underwriting discounts and deferred offering costs[37](index=37&type=chunk) - A **2-for-1 forward stock split** was approved on June 8, 2021, affecting all issued and outstanding stock, stock-based instruments, and redeemable convertible preferred stock, with all per-share amounts adjusted retrospectively[39](index=39&type=chunk) [2. Summary of Significant Accounting Policies](index=13&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - No material changes to significant accounting policies compared to the Annual Report on Form 10-K for fiscal year ended March 31, 2022[40](index=40&type=chunk) - The Company adopted ASU 2019-12 (Income Taxes) and ASU 2021-08 (Business Combinations) on April 1, 2022. The adoption of ASU 2019-12 had no material impact, while ASU 2021-08 was applied prospectively to business combinations, including the AMiON acquisition[49](index=49&type=chunk)[50](index=50&type=chunk) Significant Customer Revenue and Accounts Receivable Concentration | Metric | Revenue Three Months Ended June 30, 2022 | Revenue Three Months Ended June 30, 2021 | Accounts Receivable, Net June 30, 2022 | Accounts Receivable, Net March 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Customer A | * | 11% | 16% | 21% | | Marketing Agency | N/A | N/A | 18% | 17% | [3. Revenue Recognition](index=15&type=section&id=3.%20Revenue%20Recognition) - Revenue is primarily derived from Marketing Solutions (customer-sponsored content, professional database access) and Hiring Solutions (recruiter tools, job postings, messaging)[51](index=51&type=chunk)[52](index=52&type=chunk) Revenue Disaggregation (in thousands) | Revenue Type | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Subscription | $83,715 | $68,375 | | Other | $6,924 | $4,294 | | Total revenue | $90,639 | $72,669 | - Revenue recognized from deferred revenue as of the beginning of the period was **$54.7 million** for the three months ended June 30, 2022, up from **$49.5 million** for the same period in 2021[74](index=74&type=chunk) [4. Investments](index=18&type=section&id=4.%20Investments) Cash Equivalents and Marketable Securities (in thousands) as of June 30, 2022 | Investment Type | Fair Value | | :--- | :--- | | Money market funds | $98,332 | | Asset-backed securities | $5,836 | | Commercial paper | $5,040 | | Corporate notes and bonds | $120,313 | | Sovereign bonds | $7,351 | | U.S. government and agency securities | $527,622 | | Total cash equivalents and marketable securities | $764,494 | - Unrealized losses on debt securities totaled **$24.0 million** as of June 30, 2022. The Company does not intend to sell these securities and expects to hold them until maturity or cost basis recovery, thus no impairment was recognized[82](index=82&type=chunk) [5. Fair Value Measurements](index=20&type=section&id=5.%20Fair%20Value%20Measurements) Fair Value Hierarchy of Assets and Liabilities (in thousands) as of June 30, 2022 | Category | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Cash equivalents | $98,332 | $— | $— | $98,332 | | Marketable securities | $526,160 | $140,002 | $— | $666,162 | | Contingent earn-out consideration liability | $— | $— | $21,080 | $21,080 | - The contingent earn-out consideration liability, related to the AMiON acquisition, had a fair value of **$21.08 million** as of June 30, 2022, with a **$0.054 million** decrease in fair value during the period. It is classified as a Level 3 measurement[91](index=91&type=chunk)[92](index=92&type=chunk) [6. Property and Equipment, Net](index=22&type=section&id=6.%20Property%20and%20Equipment,%20Net) Property and Equipment, Net (in thousands) | Category | June 30, 2022 | March 31, 2022 | | :--- | :--- | :--- | | Total property and equipment, net | $11,381 | $8,488 | | Accumulated depreciation and amortization | $(9,282) | $(8,470) | - Depreciation and amortization expense on property and equipment increased to **$1.2 million** for the three months ended June 30, 2022, from **$0.9 million** in the prior year, including **$1.1 million** for internal-use software development costs[94](index=94&type=chunk) [7. Accrued Expenses and Other Current Liabilities](index=23&type=section&id=7.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued Expenses and Other Current Liabilities (in thousands) | Category | June 30, 2022 | March 31, 2022 | | :--- | :--- | :--- | | Accrued commissions | $4,034 | $6,653 | | Accrued payroll, bonus, and related expenses | $7,043 | $8,015 | | Current portion of contingent earn-out consideration liability | $5,412 | $— | | Total accrued expenses and other current liabilities | $25,253 | $25,270 | [8. Business Combinations](index=23&type=section&id=8.%20Business%20Combinations) - On April 1, 2022, Doximity acquired the assets of the AMiON on-call scheduling and messaging application for **$74.6 million**, consisting of **$53.5 million** in cash and **$21.1 million** in contingent earn-out consideration[99](index=99&type=chunk) - The acquisition resulted in **$49.025 million** in goodwill, representing future benefits from customer relationships and assembled workforce, and acquired intangible assets including customer relationships (9-year life), software technology (18-month life), and trademarks (3-year life)[103](index=103&type=chunk)[104](index=104&type=chunk) - **93,458 restricted stock units (RSUs)** were granted to eligible AMiON employees, vesting quarterly over four years, to be accounted for as post-acquisition stock-based compensation expense[101](index=101&type=chunk) [9. Intangible Assets and Goodwill](index=24&type=section&id=9.%20Intangible%20Assets%20and%20Goodwill) Intangible Assets, Net (in thousands) | Category | June 30, 2022 | March 31, 2022 | | :--- | :--- | :--- | | Customer relationships | $37,069 | $9,869 | | Other intangibles | $1,531 | $11 | | Total intangible assets, net | $35,430 | $7,909 | - Amortization expense for intangible assets increased to **$1.2 million** for the three months ended June 30, 2022, from **$0.3 million** in the prior year[106](index=106&type=chunk) Goodwill (in thousands) | Metric | Three Months Ended June 30, 2022 | | :--- | :--- | | Balance, beginning of period | $18,915 | | Goodwill acquired | $49,025 | | Balance, end of period | $67,940 | [10. Equity](index=26&type=section&id=10.%20Equity) - The Company has a dual-class common stock structure with Class A (one vote per share) and Class B (ten votes per share) common stock. As of June 30, 2022, there were **110,339,295 Class A shares** and **82,996,626 Class B shares** outstanding[112](index=112&type=chunk) - A stock repurchase program was authorized on May 12, 2022, for up to **$70 million** of Class A common stock. During the three months ended June 30, 2022, **273,746 shares** were repurchased for **$8.9 million**, leaving **$61.1 million** available[113](index=113&type=chunk)[115](index=115&type=chunk) Total Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Cost of revenue | $2,122 | $268 | | Research and development | $2,552 | $970 | | Sales and marketing | $3,074 | $1,028 | | General and administrative | $1,758 | $2,861 | | Total stock-based compensation expense | $9,506 | $5,127 | [11. Net Income Per Share Attributable to Common Stockholders](index=31&type=section&id=11.%20Net%20Income%20Per%20Share%20Attributable%20to%20Common%20Stockholders) Net Income Per Share Attributable to Common Stockholders (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net income attributable to Class A and Class B common stockholders, basic and diluted | $22,383 | $10,741 | | Weighted-average shares (Basic) | 192,947 | 87,599 | | Weighted-average shares (Diluted) | 214,954 | 114,920 | | Net income per share (Basic) | $0.12 | $0.12 | | Net income per share (Diluted) | $0.10 | $0.09 | [12. Commitments and Contingencies](index=31&type=section&id=12.%20Commitments%20and%20Contingencies) - The Company has an amended partnership agreement with U.S. News & World Report, with remaining annual minimum guarantees ranging from **$3.0 million** to **$6.2 million**, totaling **$6.6 million** for the noncancelable period of **2 years**[134](index=134&type=chunk) - A web hosting arrangement has a total remaining commitment of **$10.4 million**, ending **December 31, 2024**, with an annual commitment of **$5.2 million**[135](index=135&type=chunk) [13. Leases](index=32&type=section&id=13.%20Leases) Lease Expense (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Operating lease cost | $489 | $275 | | Variable lease cost | $39 | $35 | | Total lease cost | $528 | $310 | - The weighted-average remaining lease term increased significantly to **7.60 years** as of June 30, 2022, from **1.64 years** as of March 31, 2022, primarily due to a new **8-year office space lease** in Irving, Texas[142](index=142&type=chunk)[140](index=140&type=chunk) Maturities of Lease Liabilities (in thousands) as of June 30, 2022 | Year Ending March 31, | Operating Leases | | :--- | :--- | | Remainder of 2023 | $628 | | 2024 | $1,610 | | 2025 | $1,747 | | 2026 | $1,782 | | 2027 | $1,810 | | Thereafter | $6,518 | | Total future lease payments | $14,095 | | Less: imputed interest | $(2,326) | | Present value of lease liabilities | $11,769 | [14. Income Taxes](index=33&type=section&id=14.%20Income%20Taxes) - The effective tax rate for the three months ended June 30, 2022, was **0.5%**, lower than the U.S. federal statutory rate, primarily due to stock-based compensation related tax benefits and federal/state R&D tax credits[146](index=146&type=chunk) - Unrecognized tax benefits (UTBs) were **$6.6 million** as of June 30, 2022, with **$4.6 million** expected to impact the effective tax rate if realized[147](index=147&type=chunk) [15. Segment and Geographic Information](index=33&type=section&id=15.%20Segment%20and%20Geographic%20Information) - The Company operates as a single operating and reportable segment, with substantially all long-lived assets and revenue derived from the United States[148](index=148&type=chunk)[149](index=149&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Doximity's financial condition and operational results, including an overview of the business, key performance metrics, detailed analysis of revenue and expenses, cash flow, and critical accounting policies [Overview](index=34&type=section&id=Overview) - Doximity is the leading digital platform for U.S. medical professionals, with over **80%** of physicians across all 50 states as members, providing tools for collaboration, patient care coordination, medical news, and career management[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) Key Financial Performance (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Revenue | $90,639 | $72,669 | | Net income | $22,383 | $26,322 | | Adjusted EBITDA | $33,534 | $31,155 | - The COVID-19 pandemic has accelerated certain underlying trends, demonstrating the value of the platform, though future impact remains uncertain[156](index=156&type=chunk)[157](index=157&type=chunk) [Key Business and Financial Metrics](index=35&type=section&id=Key%20Business%20and%20Financial%20Metrics) Customers with Trailing 12-Month Subscription Revenue Greater than $100,000 | Metric | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Number of customers | **273** | **224** | Net Revenue Retention Rate | Metric | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Net revenue retention rate | **139%** | **167%** | Adjusted EBITDA and Free Cash Flow (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Adjusted EBITDA | **$33,534** | **$31,155** | | Free cash flow | **$42,627** | **$32,363** | [Components of Results of Operations](index=36&type=section&id=Components%20of%20Results%20of%20Operations) [Revenue](index=36&type=section&id=Revenue_MD&A) - Revenue is generated from Marketing Solutions (tailored content, professional database access) and Hiring Solutions (job postings, messaging to medical professionals)[173](index=173&type=chunk)[177](index=177&type=chunk) - Medical recruiting services (temporary and permanent placement) also contribute to revenue, though not significantly to total revenue for the periods presented[178](index=178&type=chunk) [Cost of Revenue](index=38&type=section&id=Cost%20of%20Revenue_MD&A) - Cost of revenue primarily includes cloud hosting, personnel-related expenses for customer success, third-party platform access, software services, amortization of internal-use software development costs, and deferred contract costs[180](index=180&type=chunk) [Gross Profit and Gross Margin](index=38&type=section&id=Gross%20Profit%20and%20Gross%20Margin_MD&A) - Gross profit and margin are influenced by new customer acquisition, sales to existing customers, investments in operations, cloud hosting costs, customer success team growth, and amortization of internal-use software development costs[181](index=181&type=chunk) [Operating Expenses](index=38&type=section&id=Operating%20Expenses_MD&A) [Research and Development](index=39&type=section&id=Research%20and%20Development_MD&A) - R&D expenses are mainly personnel-related for engineering and product teams, third-party services, and IT costs, expected to increase with platform and product growth[184](index=184&type=chunk) [Sales and Marketing](index=39&type=section&id=Sales%20and%20Marketing_MD&A) - Sales and marketing expenses include personnel, sales incentives, travel, third-party services, IT, allocated overhead, amortization of intangible assets, and changes in contingent earn-out liability fair value, expected to be the largest expense[185](index=185&type=chunk) [General and Administrative](index=39&type=section&id=General%20and%20Administrative_MD&A) - G&A expenses cover executive, finance, legal, HR, IT, and facilities personnel, along with fees for legal, accounting, insurance, and compliance costs as a public company[186](index=186&type=chunk) [Other Income, Net](index=39&type=section&id=Other%20Income,%20Net_MD&A) - Other income, net, primarily consists of administrative fees, penalties, and interest income from cash equivalents and marketable securities[187](index=187&type=chunk) [Provision for (Benefit from) Income Taxes](index=39&type=section&id=Provision%20for%20(Benefit%20from)%20Income%20Taxes_MD&A) - Income tax provision is based on an estimated annual effective tax rate, adjusted for discrete items, and differs from the U.S. statutory rate due to R&D tax credits, state income taxes, and stock-based compensation benefits[188](index=188&type=chunk) [Results of Operations Comparison (Three Months Ended June 30, 2022 and 2021)](index=40&type=section&id=Results%20of%20Operations%20Comparison%20(Three%20Months%20Ended%20June%2030,%202022%20and%202021)) [Revenue](index=42&type=section&id=Revenue_Comparison) Revenue Comparison (in thousands, except percentages) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $90,639 | $72,669 | $17,970 | 25% | - The **25%** year-over-year revenue increase was primarily driven by a **$15.3 million** increase in subscription revenue, with **$7.4 million** from new customers and **$7.9 million** from existing customer expansion (**20%** average revenue growth per existing Marketing Solutions customer)[193](index=193&type=chunk) [Cost of Revenue, Gross Profit and Gross Margin](index=42&type=section&id=Cost%20of%20revenue,%20gross%20profit%20and%20gross%20margin_Comparison) Cost of Revenue, Gross Profit and Gross Margin Comparison (in thousands, except percentages) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cost of revenue | $13,077 | $7,986 | $5,091 | 64% | | Gross profit | $77,562 | $64,683 | $12,879 | 20% | | Gross margin | 86% | 89% | -3% | N/A | - The **64%** increase in cost of revenue was due to a **$1.8 million** increase in personnel-related costs (**38%** headcount growth) and a **$2.1 million** increase in U.S. News partnership expenses, including **$1.3 million** from the U.S. News Warrant[193](index=193&type=chunk) [Operating Expenses](index=42&type=section&id=Operating%20Expenses_Comparison) [Research and Development](index=42&type=section&id=Research%20and%20development_Comparison) Research and Development Expense Comparison (in thousands, except percentages) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $19,022 | $13,241 | $5,781 | 44% | - The **44%** increase in R&D expense was driven by a **$3.1 million** increase in personnel-related costs (**21%** headcount growth) and a **$1.6 million** increase in stock-based compensation[195](index=195&type=chunk) [Sales and Marketing](index=43&type=section&id=Sales%20and%20marketing_Comparison) Sales and Marketing Expense Comparison (in thousands, except percentages) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing | $28,134 | $19,371 | $8,763 | 45% | - The **45%** increase in S&M expense was due to a **$2.8 million** increase in personnel-related costs (**22%** headcount growth), a **$2.0 million** increase in stock-based compensation, and a **$0.8 million** increase in amortization from the AMiON acquisition[197](index=197&type=chunk) [General and Administrative](index=43&type=section&id=General%20and%20administrative_Comparison) General and Administrative Expense Comparison (in thousands, except percentages) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | General and administrative | $8,724 | $7,196 | $1,528 | 21% | - The **21%** increase in G&A expense was driven by a **$1.5 million** increase in public company-related expenses (insurance, accounting, legal) and a **$0.6 million** increase in personnel-related costs, partially offset by a **$1.1 million** decrease in stock-based compensation[198](index=198&type=chunk) [Other Income, Net](index=43&type=section&id=Other%20income,%20net_Comparison) Other Income, Net Comparison (in thousands, except percentages) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Other income, net | $804 | $45 | $759 | 1687% | - The **1687%** increase in other income, net, was primarily due to an **$0.8 million** increase in interest income from increased investment in marketable securities[199](index=199&type=chunk) [Provision for (Benefit from) Income Taxes](index=43&type=section&id=Provision%20for%20(benefit%20from)%20income%20taxes_Comparison) Provision for (Benefit from) Income Taxes Comparison (in thousands, except percentages) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Provision for (benefit from) income taxes | $103 | $(1,402) | $1,505 | NM | - The Company recorded an income tax expense of **$0.1 million** for Q1 2023, compared to an income tax benefit of **$1.4 million** for Q1 2022, primarily due to decreased tax deductions from stock option activities, partially offset by increased R&D tax credits[201](index=201&type=chunk) [Cash Flows](index=44&type=section&id=Cash%20Flows_MD&A) [Liquidity and Capital Resources](index=44&type=section&id=Liquidity%20and%20Capital%20Resources_MD&A) - As of June 30, 2022, principal liquidity sources were **$776.3 million** in cash, cash equivalents, and marketable securities[204](index=204&type=chunk) - The Company repurchased **$8.9 million** of Class A common stock during the three months ended June 30, 2022, under a **$70 million** authorization, with **$61.1 million** remaining[206](index=206&type=chunk) - Existing liquidity is believed sufficient for at least the next 12 months, but future capital requirements depend on revenue growth, sales/marketing expansion, share repurchases, and R&D investments[207](index=207&type=chunk)[208](index=208&type=chunk) [Net cash provided by operating activities](index=44&type=section&id=Net%20cash%20provided%20by%20operating%20activities_MD&A) - Net cash provided by operating activities was **$44.8 million** for the three months ended June 30, 2022, driven by net income (**$22.4 million**), non-cash items (**$16.6 million**), and a net inflow from operating assets and liabilities (**$5.8 million**)[211](index=211&type=chunk) - Non-cash items included **$9.5 million** in stock-based compensation, **$2.8 million** in deferred contract costs amortization, and **$2.4 million** in depreciation and amortization[211](index=211&type=chunk) [Net cash used in investing activities](index=45&type=section&id=Net%20cash%20used%20in%20investing%20activities_MD&A) - Net cash used in investing activities was **$41.5 million** for the three months ended June 30, 2022, primarily due to **$53.5 million** for the AMiON acquisition, **$8.9 million** in marketable securities purchases, and **$1.4 million** for internal-use software development, partially offset by **$14.7 million** from marketable securities sales and **$8.3 million** from maturities[215](index=215&type=chunk) [Net cash provided by (used in) financing activities](index=45&type=section&id=Net%20cash%20provided%20by%20(used%20in)%20financing%20activities_MD&A) - Net cash used in financing activities was **$6.0 million** for the three months ended June 30, 2022, mainly due to **$8.9 million** in common stock repurchases, partially offset by **$3.0 million** from stock option and warrant exercises[217](index=217&type=chunk) [Off Balance Sheet Arrangements](index=45&type=section&id=Off%20Balance%20Sheet%20Arrangements) - The Company did not have any off-balance sheet financing arrangements or relationships with unconsolidated entities during the periods presented[219](index=219&type=chunk) [Critical Accounting Policies and Estimates](index=45&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Key accounting estimates include revenue recognition, fair values of acquired intangible assets and goodwill, useful lives of long-lived assets, valuation of common stock and stock-based awards, fair value of contingent earn-out consideration, and deferred income taxes[220](index=220&type=chunk)[221](index=221&type=chunk) - Business combinations involve significant judgment in allocating purchase consideration to assets and liabilities, with any excess recorded as goodwill. Contingent earn-out consideration is recorded at fair value and remeasured each period[221](index=221&type=chunk)[223](index=223&type=chunk) [Recent Accounting Pronouncements](index=46&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 2—Summary of Significant Accounting Policies for details on recently adopted and issued accounting pronouncements[226](index=226&type=chunk) [Jumpstart Our Business Startups Act of 2012](index=46&type=section&id=Jumpstart%20Our%20Business%20Startups%20Act%20of%202012) - Doximity is an 'emerging growth company' under the JOBS Act, electing an extended transition period for new or revised accounting standards, which may make its financial statements not comparable to other public companies[227](index=227&type=chunk)[232](index=232&type=chunk) [Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20Regarding%20Market%20Risk) This section discusses Doximity's exposure to market risks, primarily focusing on interest rate fluctuations affecting its investments and the potential impact of inflation on its business - The Company is exposed to interest rate risk due to fluctuations affecting its **$110.1 million** cash and cash equivalents and **$666.2 million** marketable securities as of June 30, 2022[229](index=229&type=chunk) - A hypothetical **100 basis point** increase in interest rates would decrease the market value of cash equivalents and marketable securities by **$8.9 million** as of June 30, 2022[230](index=230&type=chunk) - Inflation has not had a material effect on the business, but significant inflationary pressures could harm financial condition if costs cannot be offset[231](index=231&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of the company's disclosure controls and procedures, confirming their effectiveness, and notes no material changes to internal control over financial reporting, while also acknowledging the inherent limitations of any control system [Evaluation of Disclosure Controls and Procedures](index=47&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, with CEO and CFO participation, evaluated disclosure controls and procedures as effective at the reasonable assurance level as of June 30, 2022[233](index=233&type=chunk) [Changes in Internal Control over Financial Reporting](index=47&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No material changes in internal control over financial reporting were identified during the period covered by this report[234](index=234&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=47&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) - Management acknowledges that control systems provide only reasonable, not absolute, assurance, and may not prevent or detect all errors and fraud due to inherent limitations[235](index=235&type=chunk) Part II—Other Information [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 for a discussion of the company's legal proceedings, indicating that no material matters are currently known that would significantly impact financial results - For a discussion of legal proceedings, refer to Note 12—Commitments and Contingencies[237](index=237&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) This comprehensive section outlines the significant risks and uncertainties that could adversely affect Doximity's business, financial condition, and operating results, covering areas such as business growth, market competition, regulatory compliance, data security, intellectual property, and stock ownership [Risk Factors Summary](index=48&type=section&id=Risk%20Factors%20Summary) - Key risks include challenges in managing growth, limited operating history, retaining/acquiring members and customers, increasing competition, the impact of the COVID-19 pandemic, maintaining reputation, intellectual property protection, and the dual-class common stock structure[239](index=239&type=chunk) [Risks Related to Our Business](index=49&type=section&id=Risks%20Related%20to%20Our%20Business) - Failure to effectively manage rapid growth (**25% revenue growth** in Q1 2023, **930 employees** as of June 30, 2022) could harm business, financial condition, and results of operations, potentially leading to declining revenue growth rates and margins[241](index=241&type=chunk)[242](index=242&type=chunk)[244](index=244&type=chunk)[245](index=245&type=chunk) - The Company's limited operating history (commercial offerings since fiscal 2012) makes future operating results difficult to forecast and increases investment risk due to uncertainties in growth, cash flows, and profitability[246](index=246&type=chunk)[247](index=247&type=chunk) - Inability to retain existing members or add new ones, or if existing customers do not renew or expand subscriptions, could materially harm revenue and operating results, especially given revenue concentration among a small number of key customers[250](index=250&type=chunk)[254](index=254&type=chunk)[258](index=258&type=chunk) - The COVID-19 pandemic's impact on the U.S. economy and markets remains uncertain, potentially affecting business practices, shifting marketing budgets, slowing the hiring market, and increasing competition in telehealth solutions[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) [Risks Related to Data Privacy and Security](index=58&type=section&id=Risks%20Related%20to%20Data%20Privacy%20and%20Security) - The Company is subject to stringent and evolving Data Protection Laws (HIPAA, CCPA, CPRA, GDPR) and contractual obligations, with actual or perceived non-compliance potentially leading to fines, liability, reputational harm, and increased operational costs[300](index=300&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk)[309](index=309&type=chunk)[314](index=314&type=chunk) - Security breaches, cyber-attacks, employee errors, or system failures could compromise Sensitive Information, leading to data loss, service interruptions, litigation, and significant financial and reputational damage, with elevated risk during remote work periods[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk)[324](index=324&type=chunk) - Reliance on network and mobile infrastructure (e.g., Amazon Web Services, Google) and third-party platforms (Apple App Store, Google Play) means significant interruptions, undetected errors, or changes in terms could adversely affect business, requiring continuous system upgrades and adaptation to evolving technologies[325](index=325&type=chunk)[326](index=326&type=chunk)[327](index=327&type=chunk)[358](index=358&type=chunk)[414](index=414&type=chunk) [Risks Related to Legal and Regulatory Compliance](index=63&type=section&id=Risks%20Related%20to%20Legal%20and%20Regulatory%20Compliance) - Non-compliance with communication laws (e.g., TCPA) for telephonic, text, and facsimile communications by members could lead to substantial damages ($500 per violation, trebled for willful violations), civil penalties, and adverse publicity[330](index=330&type=chunk)[331](index=331&type=chunk) - The Company may incur liability for content published on its platform (defamation, misinformation, IP rights), and changes to CDA Section 230 protections could increase legal costs and impact business practices[333](index=333&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) - Fluctuations in tax obligations and effective tax rates are possible due to changes in tax laws (e.g., Tax Act, CARES Act, Wayfair decision) and accounting principles, potentially limiting the utilization of net operating loss carryforwards (NOLs) due to ownership changes or state-level restrictions[336](index=336&type=chunk)[337](index=337&type=chunk)[339](index=339&type=chunk)[340](index=340&type=chunk) [Risks Related to Business Operations and Strategy](index=64&type=section&id=Risks%20Related%20to%20Business%20Operations%20and%20Strategy) - The Company's success depends on attracting, developing, motivating, and retaining highly qualified personnel, especially senior management. Failure to do so could materially and adversely affect business execution and growth[341](index=341&type=chunk)[342](index=342&type=chunk) - Future litigation could result in significant defense costs, judgments, or settlements not fully covered by insurance, diverting management attention and harming financial condition[343](index=343&type=chunk) - Volatility in capital markets may limit access to new capital through equity or debt financing, potentially hindering business growth, acquisitions, or infrastructure improvements, and diluting existing stockholders[344](index=344&type=chunk)[345](index=345&type=chunk) - Acquisitions (e.g., AMiON) and strategic alliances carry risks such as integration problems, unanticipated costs, diversion of management, and potential loss of key employees, which could materially affect business and financial results[346](index=346&type=chunk)[347](index=347&type=chunk)[349](index=349&type=chunk) [Risks Related to Intellectual Property](index=71&type=section&id=Risks%20Related%20to%20Intellectual%20Property) - Inability to prevent third parties from copying or aggregating intellectual property and data (e.g., through scraping) could degrade the brand, negatively impact website performance, and harm the business, with legal measures potentially insufficient[389](index=389&type=chunk)[390](index=390&type=chunk) - Third-party intellectual property infringement claims, whether merited or not, can be costly to defend, divert management resources, and potentially lead to significant damages, injunctions, or the need for expensive licenses[391](index=391&type=chunk)[393](index=393&type=chunk)[394](index=394&type=chunk) - Failure to maintain, protect, or enforce intellectual property rights (patents, trademarks, trade secrets) could harm the business and competitive position, as protection is expensive, uncertain, and varies by jurisdiction[398](index=398&type=chunk)[399](index=399&type=chunk)[400](index=400&type=chunk)[406](index=406&type=chunk)[407](index=407&type=chunk) - Reliance on open source software and third-party licensed software carries risks, including potential requirements to release proprietary source code, errors/vulnerabilities, and the inability to maintain or obtain licenses on reasonable terms, which could limit functionality or increase costs[409](index=409&type=chunk)[410](index=410&type=chunk)[411](index=411&type=chunk)[412](index=412&type=chunk) [Risks Related to the Healthcare Industry](index=77&type=section&id=Risks%20Related%20to%20the%20Healthcare%20Industry) - The healthcare regulatory framework is uncertain and evolving, with new rules (e.g., CURES Act, information blocking) potentially increasing compliance costs, creating competition, or impacting telehealth reimbursement post-pandemic[417](index=417&type=chunk)[419](index=419&type=chunk)[421](index=421&type=chunk)[422](index=422&type=chunk) - Consolidation in the healthcare industry could lead to customers negotiating fee reductions, reducing demand for services, or developing competing solutions, materially affecting Doximity's business[423](index=423&type=chunk)[424](index=424&type=chunk) - Failure to comply with federal and state healthcare laws (e.g., fee splitting, anti-kickback, false claims) could result in significant administrative, civil, and criminal penalties, adversely affecting demand for services and potentially invalidating contracts[425](index=425&type=chunk)[426](index=426&type=chunk)[428](index=428&type=chunk)[429](index=429&type=chunk) [Risks Related to Ownership of Our Class A Common Stock](index=80&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Class%20A%20Common%20Stock) - The market price of Class A common stock may be volatile due to numerous factors beyond control, including financial performance, analyst coverage, economic conditions, and broader market fluctuations, potentially leading to substantial losses for investors[438](index=438&type=chunk)[439](index=439&type=chunk)[440](index=440&type=chunk) - The dual-class common stock structure concentrates **approximately 88%** of voting control with executive officers and directors, limiting other stockholders' ability to influence corporate matters and potentially discouraging acquisition proposals[441](index=441&type=chunk)[442](index=442&type=chunk) - Future sales and issuances of Class A common stock or rights to purchase, including through equity incentive plans, could dilute existing stockholders' ownership and cause the stock price to decline, especially if substantial amounts are sold in a short period[443](index=443&type=chunk)[444](index=444&type=chunk)[445](index=445&type=chunk)[446](index=446&type=chunk) - Delaware law and provisions in the company's organizational documents could make mergers, tender offers, or proxy contests more difficult, limit attempts to replace management, and potentially affect the market price of Class A common stock[452](index=452&type=chunk)[453](index=453&type=chunk)[456](index=456&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=85&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's unregistered sales of equity securities, specifically common stock warrant exercises, and provides information on its Class A common stock repurchase program and the use of proceeds from its initial public offering [Unregistered Sales of Equity Securities](index=85&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) - On May 19, 2022, **125,000 shares** of Class A common stock were issued upon the exercise of a warrant to U.S. News & World Report, L.P. at an exercise price of **$0.72 per share**, for an aggregate consideration of **$90,000**[466](index=466&type=chunk) [Share Repurchases](index=85&type=section&id=Share%20Repurchases) - The board authorized a **$70 million** Class A common stock repurchase program on May 12, 2022. During June 2022, **273,746 shares** were repurchased at an average price of **$32.40**, with **$61.1 million** remaining available[469](index=469&type=chunk)[470](index=470&type=chunk) [Use of Proceeds](index=86&type=section&id=Use%20of%20Proceeds) - The IPO, closed on June 28, 2021, generated **$548.5 million** in proceeds after deducting underwriting discounts and deferred offering costs. There has been no material change in the planned use of these proceeds[472](index=472&type=chunk) [Item 3. Defaults Upon Senior Securities](index=86&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reported period - No defaults upon senior securities were reported[473](index=473&type=chunk) [Item 4. Mine Safety Disclosures](index=86&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures to report - No mine safety disclosures were reported[474](index=474&type=chunk) [Item 5. Other Information](index=86&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information was reported[475](index=475&type=chunk) [Item 6. Exhibits](index=87&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including organizational documents, warrants, incentive plans, and certifications [Signatures](index=91&type=section&id=Signatures) This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report's submission