Why Doximity Stock Plummeted Today

Core Viewpoint - Doximity's shares fell 24% following the release of third-quarter earnings, despite exceeding sales and earnings expectations, due to conservative guidance for 4% revenue growth in Q4 [1] Financial Performance - Doximity reported a sales growth decline from 23% in Q3 last year to 10% in Q3 this year, with net income decreasing from $75 million in Q3 2025 to $62 million this year [1] - Marketing expenses rose by 27%, and significant investments were made in AI infrastructure [1] Market Dynamics - Pharmaceutical companies, key customers of Doximity, are facing industry-specific challenges, leading to delayed bookings as they await clarity on most-favored-nation agreements [2] - The sales slowdown is viewed as a short-term issue rather than a long-term problem, with indications of improved bookings growth in January [2] AI Adoption and Future Outlook - Over 100 top U.S. health systems have begun using Doximity's AI products, with over 300,000 prescribers engaged in Q3 [6] - Doximity did not include AI revenue in its guidance, but the full launch of its commercial AI suite later this year could enhance growth rates and margins [6] - The company is currently trading at 17 times free cash flow and is widely used by 85% of U.S. physicians [6]