DOCS Stock Up in Pre-Market Post Q1 Earnings Beat, Gross Margin Down

Core Insights - Doximity, Inc. (DOCS) reported adjusted earnings per share (EPS) of 36 cents for Q1 fiscal 2026, marking a 28.6% increase year over year and exceeding the Zacks Consensus Estimate by 16.1% [1][9] - The company's revenues reached $145.9 million in the same quarter, reflecting a 15.2% year-over-year growth and surpassing the Zacks Consensus Estimate by 4.5% [2][9] Revenue Breakdown - Doximity's revenue sources include Subscription and Other, with Subscription revenues totaling $137.9 million, up 14.9% year over year, driven by new and expanding existing customers [3][4] - Other revenues amounted to $8 million, representing a 19.8% increase year over year [4] Margin Analysis - Gross profit for the quarter increased by 15% year over year to $130.1 million, although gross margin contracted by 13 basis points to 89.2% [5] - Operating profit was reported at $54.5 million, an 18.4% increase from the prior year, with the operating margin expanding by 101 basis points to 37.4% [6] Financial Position - At the end of Q1 fiscal 2026, Doximity had cash and cash equivalents of $137.3 million, down from $209.6 million at the end of fiscal 2025 [7] - Net cash provided by operating activities was $62.1 million, compared to $41.2 million a year ago [7] Guidance and Outlook - Doximity raised its full-year revenue outlook to between $628 million and $636 million, up from the previous range of $619 million to $631 million [9][10] - For Q2 fiscal 2026, the company expects revenues between $157 million and $158 million, exceeding the Zacks Consensus Estimate of $150.4 million [10] Performance Highlights - The company reported double-digit growth in unique active users across various metrics, and a record number of unique active prescribers utilized Doximity's workflow tools [12] - The recent launch of Doximity AI scribe is seen as a promising development for the company's future [12]