Doximity(DOCS) - 2024 Q1 - Quarterly Report

Part I—Financial Information Condensed Consolidated Financial Statements (Unaudited) Presents Doximity's unaudited condensed consolidated financial statements, highlighting a 20% revenue increase and significant net income growth Condensed Consolidated Balance Sheets 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 | $966.1 | Condensed Consolidated Statements of Operations Statement of Operations Summary (Three Months Ended June 30) | Metric | 2023 ($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 | $0.10 | +30.0% | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (Three Months Ended June 30) | Metric | 2023 ($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] - 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][180] Notes to Condensed Consolidated Financial Statements - The company's revenue is primarily derived from subscription-based Marketing Solutions and Hiring Solutions sold to pharmaceutical companies and health systems[28][38] - 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] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting 20% revenue growth to $108.5 million, key metrics, liquidity, and capital resources Key Business and Financial Metrics - The number of customers with trailing 12-month subscription revenue greater than $100,000 increased to 296 from 264 year-over-year[129] - The net revenue retention rate was 118% for the trailing 12 months ended June 30, 2023, compared to 139% for the same period in 2022[131] Non-GAAP Financial Measures Non-GAAP Financial Highlights (Three Months Ended June 30) | Metric | 2023 ($M) | 2022 ($M) | | :--- | :--- | :--- | | Adjusted EBITDA | $46.6 | $33.5 | | Adjusted EBITDA Margin | 43% | 37% | | Free Cash Flow | $55.6 | $42.6 | Results of Operations - 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] - Gross margin improved to 88% from 86% YoY, as revenue growth outpaced the growth in cost of revenue[159][160] - 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] Liquidity and Capital Resources - As of June 30, 2023, the company's principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $873.2 million[168] - 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] Quantitative and Qualitative Disclosures about Market Risk 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][187] Controls and Procedures 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] - 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] Part II—Other Information Legal Proceedings 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][193] Risk Factors 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] Other Information 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] - 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]