Doximity Declines 4.4% in a Month: How to Play the Stock Now?

Core Insights - Doximity's shares have decreased by approximately 4.4% over the past month despite solid fiscal Q4 2025 results, which included revenues of $138.3 million and a 50% adjusted EBITDA margin [1][3] - For fiscal 2025, total revenues reached $570.4 million, reflecting a 20% year-over-year increase, with adjusted EBITDA rising 36% to $313.8 million and margin expanding to 55% [1][4] Financial Performance - In Q4 2025, Doximity's revenues increased by 17% to $138.3 million, with an adjusted EBITDA margin of 50% [8] - The company reported a free cash flow of $97 million in Q4, contributing to a total cash position of $916 million by the end of the quarter [3][4] - Doximity raised its fiscal 2025 revenue guidance by $55-65 million to a range of $619-$631 million, indicating a 10% growth at the midpoint [5] Client Engagement and Retention - Net revenue retention reached 119% on a trailing 12-month basis, with the top 20 clients achieving a retention rate of 123% [9] - The number of customers generating over $500,000 in annual subscription revenues grew by 17% to 116, accounting for 84% of total revenues [9] Growth Drivers - Continued revenue and margin expansion were evident, with Q4 2025 top line exceeding guidance by 4% and adjusted EBITDA surpassing guidance by 10% [4] - Doximity's integrated multi-module programs and AI tools have accelerated client upsells and engagement [8] Challenges and Competition - The company faces macro and policy uncertainties, with management conservatively projecting a 5-7% growth in the pharmaceutical HCP digital market for fiscal 2026 [13] - Doximity competes with established players like Veeva Systems, Teladoc Health, and IQVIA Holdings for clinician engagement and marketing budgets [14][15] - Monetization of AI products remains low, with management acknowledging uncertainties regarding payback periods and long-term margin contributions [16] Valuation and Investment Outlook - Doximity's shares are considered overvalued, trading at a forward P/E of 36.05X compared to the sector's 14.26X [10] - The company demonstrates a profitable, high-growth business model, but challenges include macro uncertainties and competition for physician attention [20]