Doximity Inc

Previous wording

Our business model has delivered high revenue growth at scale with profitability. For the three months ended June 30, 2024 and 2023, we recognized revenue of $126.7 million and $108.5 million, respectively, representing a year-over-year growth rate of 17%. For the three months ended June 30, 2024 and 2023, our net income was $41.4 million and $28.4 million and our adjusted EBITDA was $65.9 million and $46.6 million, respectively. We have accomplished this while focusing on our core mission to help every physician be more productive and provide better care for their patients.

Current wording

Our business model has delivered high revenue growth at scale with profitability. For the three months ended September 30, 2024 and 2023, we recognized revenue of $136.8 million and $113.6 million, respectively, representing a year-over-year growth rate of 20%. For the six months ended September 30, 2024 and 2023, we recognized revenue of $263.5 million and $222.1 million, respectively, representing a year-over-year growth rate of 19%. For the three months ended September 30, 2024 and 2023, our net income was $44.2 million and $30.6 million and our adjusted EBITDA was $76.1 million and $54.2 million, respectively. For the six months ended September 30, 2024 and 2023, our net income was $85.5 million and $59.0 million and our adjusted EBITDA was $142.1 million and $100.7 million, respectively. We have accomplished this while focusing on our core mission to help every physician be more productive and provide better care for their patients.

Previous wording

The number of customers with at least $500,000 of revenue has grown steadily in recent years as we have engaged new customers and expanded within existing ones. This cohort of customers accounted for approximately 82% of our revenue for the TTM ended June 30, 2024.

Current wording

The number of customers with at least $500,000 of revenue has grown steadily in recent years as we have engaged new customers and expanded within existing ones. This cohort of customers accounted for approximately 83% of our revenue for the TTM ended September 30, 2024.

Previous wording

We define adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization, and as further adjusted for stock-based compensation expense, change in fair value of contingent earn-out consideration liability, and other income, net. Net income margin represents net income as a percentage of revenue and adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue.

Current wording

We define adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization, and as further adjusted for stock-based compensation expense, restructuring and impairment charge, change in fair value of contingent earn-out consideration liability, and other income, net. Net income margin represents net income as a percentage of revenue and adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue.

Previous wording

We also generate revenue from temporary and permanent medical recruiting services which we charge on an hourly-fee, and retainer and placement-fee basis, respectively. For the three months ended June 30, 2024 and 2023, the revenue from temporary and permanent medical recruiting services was not significant to our total revenue.

Current wording

We also generate revenue from temporary and permanent medical recruiting services which we charge on an hourly-fee, and retainer and placement-fee basis, respectively. For the three and six months ended September 30, 2024 and 2023, the revenue from temporary and permanent medical recruiting services was not significant to our total revenue.

Previous wording

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses.

Current wording

Our operating expenses consist of research and development, sales and marketing, general and administrative expenses, and restructuring and impairment charge.

Previous wording

Comparison of the three months ended June 30, 2024 and 2023.

Current wording

Comparison of the three and six months ended September 30, 2024 and 2023.

Previous wording

Revenue for the three months ended June 30, 2024 increased $18.2 million as compared to the same period in 2023. The increase was primarily driven by a $18.7 million increase in subscription revenue. Of the increase in subscription revenue, $5.5 million was driven by the addition of new subscription customers 1 and $13.2 million was due to the expansion of existing customers. The expansion of existing customers was primarily driven by average revenue per existing Marketing Solutions customers increasing by approximately 19% as a result of adding new and growing existing brands and service lines. Approximately 95% of our revenue for the three months ended June 30, 2024 was derived from subscription customers. The remaining change in revenue was primarily due to a reduction in permanent placement recruiting services.

Current wording

Revenue for the three months ended September 30, 2024 increased $23.2 million as compared to the same period in 2023. The increase was primarily driven by a $23.0 million increase in subscription revenue. Of the increase in subscription revenue, $5.7 million was driven by the addition of new subscription customers 1 and $17.3 million was due to the expansion of existing customers. The expansion of existing customers was primarily driven by average revenue per existing Marketing Solutions customers increasing by approximately 22% as a result of adding new and growing existing brands and service lines. Approximately 95% of our revenue for the three months ended September 30, 2024 was derived from subscription customers.

Previous wording

The gross margin for the three months ended June 30, 2024 increased due to the growth in our revenue.

Current wording

The gross margin for the three and six months ended September 30, 2024 increased due to the growth in our revenue outpacing the growth in our cost of revenue.

Previous wording

Sales and marketing expense for the three months ended June 30, 2024 increased $0.8 million as compared to the same period in 2023. The increase was primarily driven by a $0.9 million increase in sales incentive compensation and a $0.6 million increase in stock-based compensation expense as a result of new awards granted to existing employees and a $0.5 million increase in marketing activities. These increases were partially offset by a $1.5 million decrease in personnel costs as a result of a reduction in average headcount due to the Company’s restructuring plan executed in August 2023.

Current wording

Sales and marketing expense for the six months ended September 30, 2024 increased $5.0 million as compared to the same period in 2023. The increase was driven by a $4.7 million net increase in stock-based compensation as a result of new awards granted to existing and new employees, partially offset by a decrease in stock-based compensation from awards fully vested since the prior year, a $1.7 million increase in sales incentive compensation, and a $0.6 million increase in third-party software and contractor costs. These increases were partially offset by a $2.3 million decrease in personnel costs due to a reduction in average headcount.

Previous wording

Other income, net for the three months ended June 30, 2024 increased $2.3 million as compared to the same period in 2023, primarily driven by increases in interest income due to higher yields earned on our cash equivalents and marketable securities portfolio.

Current wording

Other income, net for the three and six months ended September 30, 2024 increased $3.1 million and $5.4 million as compared to the same periods in 2023, primarily driven by increases in interest income due to higher yields earned on our cash equivalents and marketable securities portfolio, partially offset by lower average portfolio balances.

Previous wording

Income tax expense for the three months ended June 30, 2024 increased $5.7 million as compared to the same period in 2023, primarily driven by higher income before taxes and decreased tax deductions from stock award activities.

Current wording

Income tax expense for the three and six months ended September 30, 2024 increased $8.9 million and $14.6 million as compared to the same periods in 2023, primarily driven by higher income before taxes and decreased tax deductions from stock award activities.

Previous wording

Since inception, we have financed operations primarily through proceeds received from sales of equity securities and payments received from our customers. As of June 30, 2024, our principal sources of liquidity were cash and cash equivalents and marketable securities of $750.5 million. Our marketable securities consist of U.S. government and agency securities, corporate notes and bonds, and commercial paper.

Current wording

Since inception, we have financed operations primarily through proceeds received from sales of equity securities and payments received from our customers. As of September 30, 2024, our principal sources of liquidity were cash and cash equivalents and marketable securities of $805.6 million. Our marketable securities consist of U.S. government and agency securities, corporate notes and bonds, and commercial paper.

Previous wording

The Company’s board of directors previously authorized various programs to repurchase up to $410 million of the Company’s Class A common stock. Under these programs, the Company repurchased and retired 16,480,514 shares of Class A common stock. All of these programs were completed as of April 2024.

Current wording

Prior to March 31, 2024, the Company’s board of directors authorized various programs to repurchase up to $410 million of the Company’s Class A common stock. Under these programs, the Company repurchased and retired 16,480,514 shares of Class A common stock. All of these programs were completed as of April 2024.

Previous wording

On May 1, 2024 the Company’s board of directors authorized a program to repurchase up to $500 million of the Company’s Class A common stock with no expiration date. As of June 30, 2024, the Company repurchased and retired 281,570 shares of Class A common stock under this program for an aggregate purchase price of $7.9 million. As of June 30, 2024, $492.1 million remained available and authorized for repurchase.

Current wording

On May 1, 2024 the Company’s board of directors authorized a program to repurchase up to $500 million of the Company’s Class A common stock with no expiration date. As of September 30, 2024, the Company repurchased and retired 1,021,233 shares of Class A common stock under this program for an aggregate purchase price of $30.0 million and $470.0 million remained available and authorized for repurchase.

Previous wording

All repurchases are subject to general business and market conditions and other investment opportunities and may be executed through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. Immediately upon the repurchase of any shares of Class A common stock, such shares shall be retired by the Company and shall automatically return to the status of authorized but unissued shares of Class A common stock.

Current wording

Immediately upon the repurchase of any shares of Class A common stock, such shares shall be retired by the Company and shall automatically return to the status of authorized but unissued shares of Class A common stock.

Previous wording

Effective January 1, 2023, the Company’s share repurchases in excess of allowable share issuances are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. To date, the Company has incurred excise taxes of $1.7 million, all of which remained unpaid as of June 30, 2024.

Current wording

Effective January 1, 2023, the Company’s share repurchases in excess of allowable share issuances are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. As of March 31, 2024 and September 30, 2024, the Company had accrued excise taxes of $1.5 million, all of which remained unpaid as of September 30, 2024.

Previous wording

Cash provided by operating activities was $41.2 million for the three months ended June 30, 2024. This consisted of net income of $41.4 million, adjusted for non-cash items of $20.0 million and a net outflow from operating assets and liabilities of $20.1 million. Non-cash items primarily consisted of stock-based compensation expense of $17.1 million, depreciation and amortization expense of $2.6 million, amortization of deferred contract costs of $2.7 million, non-cash lease expense of $0.5 million, partially offset by the accretion of discount on marketable securities of $2.4 million. The net outflow from operating assets and liabilities was driven by a $19.4 million increase in accounts receivable due to the timing of billings and collections, a $12.9 million decrease in accounts payable, accrued expenses, and other liabilities which was primarily due to the timing of transferable tax credit payments, and a $1.4 million increase in deferred contract costs. The outflows were partially offset by a $10.5 million decrease in prepaid expenses and other assets primarily due to prepaid taxes, and a $3.7 million increase in deferred revenue due to the timing of customer billings and program launches. During the three months ended June 30, 2024, the Company made $12.9 million in payments for taxes, whereas during the three months ended June 30, 2023, the Company did not make significant tax payments. The increase in cash paid for income taxes was partially related to the Tax Cuts and Jobs Act of 2017, which eliminated the option to deduct research and development expenditures and required taxpayers to capitalize and amortize them over five or fifteen years. Although Congress is considering legislation that would defer the amortization requirement to later years, we have no assurance that the provision will be so deferred, repealed or otherwise modified. The requirement may also reduce our cash flows from operating activities in future periods, the amounts and specific periods of which we are unable to estimate at this time.

Current wording

Cash provided by operating activities was $109.6 million for the six months ended September 30, 2024. This consisted of net income of $85.5 million, adjusted for non-cash items of $42.9 million and a net outflow from operating assets and liabilities of $18.8 million. Non-cash items primarily consisted of stock-based compensation expense of $35.0 million, depreciation and amortization expense of $5.2 million, amortization of deferred contract costs of $4.8 million, impairment of long-lived assets of $2.3 million, and non-cash lease expense of $1.0 million, partially offset by the accretion of discount on marketable securities of $5.4 million. The net outflow from operating assets and liabilities was driven by a $23.5 million increase in accounts receivable due to the timing of billings and collections, a $5.5 million decrease in accounts payable, accrued expenses, and other liabilities which was primarily due to the timing of income tax and transferable tax credit payments, a $5.5 million decrease in deferred revenue due to the timing of customer billings and program launches, and a $3.2 million increase in deferred contract costs. The outflows were partially offset by a $19.9 million decrease in prepaid expenses and other assets primarily due to prepaid taxes. During the six months ended September 30, 2024 and 2023, the Company made $22.0 million and $29.4 million, respectively, in payments for taxes. The increase in cash paid for income taxes in these periods, as compared to prior years, was partially related to the Tax Cuts and Jobs Act of 2017, which eliminated the option to deduct research and development expenditures and required taxpayers to capitalize and amortize them over five or fifteen years. Although Congress is considering legislation that would defer the amortization requirement to later years, we have no assurance that the provision will be so deferred, repealed or otherwise modified. The requirement may also reduce our cash flows from operating activities in future periods, the amounts and specific periods of which we are unable to estimate at this time.

Previous wording

Cash provided by operating activities was $57.2 million for the three months ended June 30, 2023. This consisted of net income of $28.4 million, adjusted for non-cash items of $19.6 million and a net inflow from operating assets and liabilities of $9.2 million. Non-cash items primarily consisted of stock-based compensation expense of $14.0 million, depreciation and amortization expense of $2.6 million, and amortization of deferred contract costs of $2.7 million. The net inflow from operating assets and liabilities was driven by a $14.0 million decrease in accounts receivable due to the timing of billings and collections, a $0.7 million increase in accounts payable, accrued expenses, and other liabilities due to the increase in employee contributions under the ESPP, and a $2.6 million decrease in prepaid expenses and other assets. These inflows were partially offset by a $6.9 million decrease in deferred revenue due to the timing of customer billings and program launches, and a $1.2 million increase in deferred contract costs.

Current wording

Cash provided by operating activities was $70.1 million for the six months ended September 30, 2023. This consisted of net income of $59.0 million, adjusted for non-cash items of $36.8 million and a net outflow from operating assets and liabilities of $25.7 million. Non-cash items primarily consisted of stock-based compensation expense of $27.4 million, depreciation and amortization expense of $5.2 million, amortization of deferred contract costs of $4.7 million, non-cash lease expense of $1.1 million, partially offset by the accretion of discount on marketable securities of $1.8 million. The net outflow from operating assets and liabilities was driven by a $13.8 million decrease in deferred revenue due to the timing of customer billings and program launches, a $10.5 million increase in prepaid expenses and other assets primarily due to prepayment of income taxes, an $8.1 million decrease in accounts payable, accrued expenses, and other liabilities which was primarily due to the timing of commissions and agency rebate payments, and a $2.4 million increase in deferred contract costs. These outflows were partially offset by a $9.6 million decrease in accounts receivable due to the timing of billings and collections.

Previous wording

Cash provided by investing activities was $29.9 million for the three months ended June 30, 2024, which primarily consisted of proceeds from the maturities of marketable securities of $202.1 million, partially offset by $170.4 million of marketable securities purchases and $1.7 million for internal-use software development costs.

Current wording

Cash provided by investing activities was $54.1 million for the six months ended September 30, 2024, which primarily consisted of proceeds from the maturities of marketable securities of $417.9 million and $7.2 million of proceeds from the sale of marketable securities, partially offset by $367.8 million of marketable securities purchases and $3.2 million for internal-use software development costs.

Previous wording

Cash provided by investing activities was $117.3 million for the three months ended June 30, 2023, which primarily consisted of proceeds from the maturities of marketable securities of $116.6 million and proceeds from the sale of marketable securities of $37.5 million. These inflows were partially offset by $35.3 million of marketable securities purchases and $1.5 million for internal-use software development costs.

Current wording

Cash provided by investing activities was $67.2 million for the six months ended September 30, 2023, which primarily consisted of proceeds from the maturities of marketable securities of $212.8 million and proceeds from the sale of marketable securities of $37.5 million. These inflows were partially offset by $180.2 million of marketable securities purchases and $2.7 million for internal-use software development costs.

Previous wording

Cash used in financing activities was $56.5 million for the three months ended June 30, 2024, which primarily consisted of common stock repurchases of $51.2 million, $5.5 million of payments for contingent consideration related to the AMiON acquisition, and $2.4 million of taxes paid related to the net share settlement of equity awards. These payments were partially offset by $2.6 million of proceeds from the exercise of stock options.

Current wording

Cash used in financing activities was $76.2 million for the six months ended September 30, 2024, which primarily consisted of common stock repurchases of $74.2 million, $5.5 million of payments for contingent consideration related to the AMiON acquisition, and $8.2 million of taxes paid related to the net share settlement of equity awards. These payments were partially offset by $10.2 million of proceeds from the exercise of stock options and common stock warrants, and $1.4 million of proceeds from the issuance of common stock in connection with the Company’s employee stock purchase plan.

Previous wording

Cash used in financing activities was $25.8 million for the three months ended June 30, 2023, which primarily consisted of common stock repurchases of $21.8 million, $5.4 million of payments for contingent consideration related to the AMiON acquisition, and $2.0 million of taxes paid related to the net share settlement of equity awards. These payments were partially offset by $3.3 million of proceeds from the exercise of stock options.

Current wording

Cash used in financing activities was $186.9 million for the six months ended September 30, 2023, which primarily consisted of common stock repurchases of $186.2 million, $5.4 million of payments for contingent consideration related to the AMiON acquisition, and $4.1 million of taxes paid related to the net share settlement of equity awards. These payments were partially offset by $7.2 million of proceeds from the exercise of stock options, and $1.5 million of proceeds from the issuance of common stock related to the employee stock purchase plan.

Previous wording

There have been no material changes to our critical accounting policies and estimates during the three months ended June 30, 2024 as compared to those described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 and filed with the SEC on May 23, 2024.

Current wording

There have been no material changes to our critical accounting policies and estimates during the three and six months ended September 30, 2024 as compared to those described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 and filed with the SEC on May 23, 2024.