Doximity, Inc. [DOCS] Filings

10-Q 1 docs-20240930.htm 10-Q docs-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________________________________________________________________________________

FORM 10-Q

_________________________________________________________________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-40508

_________________________________________________________________________________________________________________

Doximity, Inc.

(Exact Name of Registrant as Specified in its Charter)

_________________________________________________________________________________________________________________


Delaware						27-2485512
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)
500 3rd St. Suite 510 San Francisco, CA 94107 (Address of principal executive offices, including zip code)
(650) 549-4330 (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Class A common stock, $0.001 par value per share

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The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The registrant had outstanding 128,135,991 shares of Class A common stock and 58,555,770 shares of Class B common stock as of October 31, 2024.

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TABLE OF CONTENTS


	Part I—Financial Information	Page
Item 1.	Condensed Consolidated Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of September 30, 2024 and March 31, 2024	1
	Condensed Consolidated Statements of Operations for the three and six months ended September 30, 2024 and 2023	2
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended September 30, 2024 and 2023	3
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended September 30, 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2024 and 2023	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4.	Controls and Procedures	35
	Part II—Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
	Signatures	40

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which are statements that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•our expectations regarding our revenue, expenses, and other operating results;

•our future financial performance;

•our expectations and management of future growth;

•our ability to acquire new members and successfully retain existing members;

•our ability to acquire new customers and successfully retain existing customers;

•our ability to achieve or maintain our profitability;

•future investments in our business, our anticipated capital expenditures, and our estimates regarding our capital requirements;

•the costs and success of our sales and marketing efforts, and our ability to promote our brand;

•our ability to effectively manage our growth, including our ability to identify, retain, and recruit personnel, and maintain our culture;

•our ability to comply with laws and regulations;

•our ability to successfully defend litigation brought against us;

•our ability to maintain, protect, and enhance our intellectual property rights and any costs associated therewith;

•our ability to maintain data privacy and data security;

•our ability to respond to rapid technological changes;

•our expectations regarding the impact of uncertainty in the current economic environment and macroeconomic uncertainty;

•our ability to compete effectively with existing competitors and new market entrants;

•the growth rates of the markets in which we compete;

•the increased expenses associated with being a public company;

•the impact of any cost-savings or restructuring activities we may undertake in the future;

•the sufficiency of our cash and cash equivalents and marketable securities to meet our liquidity needs;

•our ability to comply with modified or new laws and regulations applying to our business;

•our ability to successfully identify, acquire, and integrate companies and assets;

•developments and projections relating to our competitors and our industry, including competing solutions;

•impact from future regulatory, judicial, and legislative changes or developments that may affect our customers’ or our business; and

•the risks related to our Class A common stock and our dual class common stock structure.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

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You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, results of operations, financial condition, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 filed with the Securities and Exchange Commission, the SEC, on May 23, 2024, and elsewhere in this Quarterly Report on Form 10-Q, as well as in our other filings with the SEC. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

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PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

DOXIMITY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)


	September 30, 2024		March 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	184,248	$	96,785
Marketable securities	621,310		666,115
Accounts receivable, net of allowance for doubtful accounts of $1,767 and $1,893 at September 30, 2024 and March 31, 2024, respectively	124,793		101,332
Prepaid expenses and other current assets	27,361		48,709
Total current assets	957,712		912,941
Property and equipment, net	12,818		12,318
Deferred income tax assets	43,761		45,068
Operating lease right-of-use assets	9,774		12,332
Intangible assets, net	25,195		27,317
Goodwill	67,940		67,940

Other assets	1,316		1,458
Total assets	$	1,118,516	$	1,079,374
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,770	$	2,253
Accrued expenses and other current liabilities	33,540		43,703
Deferred revenue, current	93,751		99,145
Operating lease liabilities, current	2,222		2,149

Total current liabilities	132,283		147,250
Deferred revenue, non-current	148		211
Operating lease liabilities, non-current	11,269		12,397
Contingent earn-out consideration liability, non-current	5,469		10,895

Other liabilities, non-current	8,151		7,224
Total liabilities	157,320		177,977
Commitments and contingencies (Note 12)


Stockholders' Equity
Preferred stock, $0.001 par value; 100,000 shares authorized as of September 30, 2024 and March 31, 2024, respectively; zero shares issued and outstanding as of September 30, 2024 and March 31, 2024, respectively	—		—
Class A and Class B common stock, $0.001 par value; 1,500,000 shares authorized as of September 30, 2024 and March 31, 2024, respectively; 186,781 and 186,562 shares issued and outstanding as of September 30, 2024 and March 31, 2024, respectively	187		187
Additional paid-in capital	863,113		823,885
Accumulated other comprehensive income (loss)	2,676		(2,664)
Retained earnings	95,220		79,989
Total stockholders’ equity	961,196		901,397
Total liabilities and stockholders’ equity	$	1,118,516	$	1,079,374

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DOXIMITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
Revenue	$	136,832	$	113,612	$	263,508	$	222,081
Cost of revenue	13,676		12,759		27,226		25,912
Gross profit	123,156		100,853		236,282		196,169
Operating expenses:
Research and development	23,240		19,958		45,814		41,889
Sales and marketing	34,367		30,201		69,611		64,656
General and administrative	10,103		8,966		19,358		18,213
Restructuring and impairment charge	2,304		7,936		2,304		7,936
Total operating expenses	70,014		67,061		137,087		132,694
Income from operations	53,142		33,792		99,195		63,475
Other income, net	9,029		5,903		16,145		10,742
Income before income taxes	62,171		39,695		115,340		74,217
Provision for income taxes	18,017		9,093		29,809		15,209
Net income	$	44,154	$	30,602	$	85,531	$	59,008
Net income per share attributable to Class A and Class B common stockholders:
Basic	$	0.24	$	0.16	$	0.46	$	0.30
Diluted	$	0.22	$	0.15	$	0.43	$	0.28
Weighted-average shares used in computing net income per share attributable to Class A and Class B common stockholders:
Basic	186,252		193,112		185,933		193,813
Diluted	200,407		209,014		199,818		210,681

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DOXIMITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
Net income	$	44,154	$	30,602	$	85,531	$	59,008
Other comprehensive income
Change in unrealized gain on available-for-sale-securities, net of tax provision of $1,246, $1,146, $1,803 and $1,736, respectively	3,684		3,408		5,340		5,155

Comprehensive income	$	47,838	$	34,010	$	90,871	$	64,163

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DOXIMITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Three Months Ended September 30, 2024
	Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Stockholders' Equity
	Shares	Amount
Balance as of June 30, 2024	185,704	$	186	$	841,470	$	(1,008)	$	72,932	$	913,580
Stock-based compensation	—	—		16,992		—		—		16,992
Exercise of stock options and common stock warrants	1,441	1		7,707		—		—		7,708
Vesting of restricted stock units	321	—		—		—		—		—
Tax withholding on shares under stock-based compensation awards	—	—		(5,828)		—		—		(5,828)
Repurchase and retirement of common stock, including excise tax	(740)	—		—		—		(21,866)		(21,866)
Common stock warrant expense	—	—		1,350		—		—		1,350
Issuance of common stock in connection with the employee stock purchase plan	55	—		1,422		—		—		1,422
Other comprehensive income	—	—		—		3,684		—		3,684
Net income	—	—		—		—		44,154		44,154
Balance as of September 30, 2024	186,781	$	187	$	863,113	$	2,676	$	95,220	$	961,196


	Three Months Ended September 30, 2023
	Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Stockholders' Equity
	Shares	Amount
Balance as of June 30, 2023	194,649	$	195	$	777,772	$	(12,336)	$	225,156	$	990,787
Stock-based compensation	—	—		12,348		—		—		12,348
Exercise of stock options	1,129	1		3,960		—		—		3,961
Vesting of restricted stock units	199	—		—		—		—		—
Tax withholding on shares under stock-based compensation awards	—	—		(2,120)		—		—		(2,120)
Repurchase and retirement of common stock, including excise tax	(7,536)	(8)		—		—		(170,355)		(170,363)
Common stock warrant expense	—	—		1,350		—		—		1,350
Issuance of common stock in connection with the employee stock purchase plan	77	—		1,494		—		—		1,494
Other comprehensive income	—	—		—		3,408		—		3,408

Net income	—	—		—		—		30,602		30,602
Balance as of September 30, 2023	188,518	$	188	$	794,804	$	(8,928)	$	85,403	$	871,467

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DOXIMITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Six Months Ended September 30, 2024
	Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Stockholders' Equity
	Shares	Amount
Balance as of March 31, 2024	186,562	$	187	$	823,885	$	(2,664)	$	79,989	$	901,397
Stock-based compensation	—	—		33,089		—		—		33,089
Exercise of stock options and common stock warrants	2,225	2		10,254		—		—		10,256
Vesting of restricted stock units	532	—		—		—		—		—
Tax withholding on shares under stock-based compensation awards	—	—		(8,222)		—		—		(8,222)

Repurchase and retirement of common stock, including excise tax	(2,593)	(2)		—		—		(70,300)		(70,302)
Common stock warrant expense	—	—		2,685		—		—		2,685
Issuance of common stock in connection with the employee stock purchase plan	55	—		1,422		—		—		1,422
Other comprehensive income	—	—		—		5,340		—		5,340
Net income	—	—		—		—		85,531		85,531
Balance as of September 30, 2024	186,781	$	187	$	863,113	$	2,676	$	95,220	$	961,196


	Six Months Ended September 30, 2023
	Class A and Class B Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Stockholders' Equity
	Shares	Amount
Balance as of March 31, 2023	193,941	$	194	$	762,150	$	(14,083)	$	217,855	$	966,116
Stock-based compensation	—	—		25,307		—		—		25,307
Exercise of stock options	2,380	2		7,252		—		—		7,254
Vesting of restricted stock units	320	—		—		—		—		—
Tax withholding on shares under stock-based compensation awards	—	—		(4,084)		—		—		(4,084)
Repurchase and retirement of common stock, including excise tax	(8,200)	(8)		—		—		(191,460)		(191,468)
Common stock warrant expense	—	—		2,685		—		—		2,685
Issuance of common stock in connection with the employee stock purchase plan	77	—		1,494		—		—		1,494
Other comprehensive income	—	—		—		5,155		—		5,155

Net income	—	—		—		—		59,008		59,008
Balance as of September 30, 2023	188,518	$	188	$	794,804	$	(8,928)	$	85,403	$	871,467

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DOXIMITY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended September 30,
	2024		2023
Cash flows from operating activities
Net income	$	85,531	$	59,008
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,175		5,208
Deferred income taxes	204		—
Stock-based compensation, net of amounts capitalized	34,958		27,448
Non-cash lease expense	951		1,077


Accretion of discount on marketable securities, net	(5,368)		(1,794)



Amortization of deferred contract costs	4,759		4,730



Impairment of long-lived assets	2,304		—
Other	(122)		127
Changes in operating assets and liabilities:
Accounts receivable	(23,478)		9,644
Prepaid expenses and other assets	19,948		(10,504)
Deferred contract costs	(3,216)		(2,448)

Accounts payable, accrued expenses and other liabilities	(5,546)		(8,063)
Deferred revenue	(5,457)		(13,753)
Operating lease liabilities	(1,054)		(582)

Net cash provided by operating activities	109,589		70,098
Cash flows from investing activities

Purchases of property and equipment	—		(111)
Internal-use software development costs	(3,247)		(2,732)

Purchases of marketable securities	(367,808)		(180,226)
Maturities of marketable securities	417,913		212,768
Sales of marketable securities	7,241		37,525


Net cash provided by investing activities	54,099		67,224
Cash flows from financing activities

Proceeds from issuance of common stock upon exercise of stock options and common stock warrants	10,243		7,218
Proceeds from issuance of common stock in connection with the employee stock purchase plan	1,422		1,494
Taxes paid related to net share settlement of equity awards	(8,222)		(4,084)
Repurchase of common stock	(74,198)		(186,184)
Payment of contingent consideration related to a business combination	(5,470)		(5,390)

Net cash used in financing activities	(76,225)		(186,946)
Net increase (decrease) in cash and cash equivalents	87,463		(49,624)
Cash and cash equivalents, beginning of period	96,785		158,027
Cash and cash equivalents, end of period	$	184,248	$	108,403
Supplemental disclosures of cash flow information
Cash paid for taxes, net of refunds	$	21,985	$	29,438
Non-cash financing and investing activities









Share repurchases included in accrued expenses	$	104	$	5,003
Excise tax payable on share repurchases	$	1,493	$	1,030

The accompanying notes are an integral part of these condensed consolidated financial statements.

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DOXIMITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Description of Business

Doximity, Inc. (the “Company”) was incorporated in the state of Delaware in April 2010 as 3MD Communications, Inc. and is headquartered in San Francisco, California. The Company subsequently changed its name to Doximity, Inc. in June 2010. The Company provides an online platform, which enables physicians and other healthcare professionals to collaborate with their colleagues, stay up to date with the latest medical news and research, manage their careers and on-call schedules, streamline documentation and administrative paperwork, and conduct virtual patient visits. The Company’s customers primarily include pharmaceutical companies and health systems that connect with healthcare professionals through the Company’s digital Marketing and Hiring Solutions. Marketing Solutions provide customers with the ability to share tailored content on the network. Hiring Solutions enable customers to identify, connect with, and hire from the network of both active and passive potential medical professional candidates.

2. Summary of Significant Accounting Policies

There have been no material changes to the significant accounting policies of the Company during the six months ended September 30, 2024 as compared to those described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 and filed with the SEC on May 23, 2024.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with U.S. GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

The accompanying condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of the Company’s management, the information contained herein reflects all adjustments necessary for a fair presentation of the Company’s financial position, results of operations, stockholders’ equity, and cash flows. The results of operations for the three and six months ended September 30, 2024, shown in this report are not necessarily indicative of the results to be expected for the full year ending March 31, 2025.

Fiscal Year

The Company’s fiscal year ends on March 31st. Unless otherwise noted, all references to a particular year shall mean the Company’s fiscal year.

Use of Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts stated in the condensed consolidated financial statements and accompanying notes. These judgments, estimates, and assumptions are used for, but not limited to, revenue recognition, the fair values of acquired intangible assets and goodwill, the useful lives of long-lived assets, fair value of contingent earn-out consideration, and deferred income taxes. The Company bases its estimates on historical experience and on assumptions that management considers reasonable. The Company assesses these estimates on a regular basis; however, actual results could differ from these estimates due to risks and uncertainties, including uncertainty in the current economic environment.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and accounts receivable. The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements. The Company’s investment policy addresses the level of credit exposure by

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DOXIMITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

limiting the concentration in any one corporate issuer or sector and establishing a minimum allowable credit rating. To manage risk exposure, the Company invests cash equivalents and marketable securities in a variety of fixed income securities, including government and investment-grade debt securities and money market funds. The Company places its cash primarily in checking and money market accounts with reputable financial institutions. Deposits held with these financial institutions may exceed the amount of insurance provided on such deposits, if any.

Concentrations of credit risk with respect to accounts receivable are primarily limited to certain customers to which the Company makes substantial sales. No customer represented 10% or more of revenue for the three and six months ended September 30, 2024 and 2023. The Company’s significant customers that represented 10% or more of accounts receivable, net for the periods presented were as follows:


	Accounts Receivable, Net
		September 30, 2024	March 31, 2024

Customer A				13	%	*
Customer B				13	%	15	%
Customer C				10	%	*

_______________

* Less than 10%

For the purpose of assessing the concentration of credit risk for significant customers, the Company defines a customer as an entity that purchases the Company’s services directly or indirectly through marketing agencies.

Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for the Company for its fiscal year beginning April 1, 2024, and for interim periods within the fiscal year beginning April 1, 2025, with early adoption permitted, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance annual income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning April 1, 2025, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

3. Revenue Recognition

The Company’s revenue is primarily derived from the sale of subscriptions for the following solutions:

•Marketing Solutions: Hosting of customer-sponsored content on the Doximity platform and providing access to the Company’s professional database of healthcare professionals for referral or marketing purposes during the subscription period.

•Hiring Solutions: Providing customers access to the Company’s professional tools where recruiters can access the Company’s database of healthcare professionals, allowing customers to send messages for talent sourcing and to share job postings during the subscription period.

The Company recognizes revenue through the following five steps:

1) Identify the contract with a customer

The Company considers the terms and conditions of its contracts and the Company’s customary business practices in identifying its contracts under ASC 606. The Company determines it has a contract with a customer when the contract has been approved by both parties, it can identify each party’s rights regarding the services to be transferred and the payment terms for

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(unaudited)

the services, it has determined that the customer has the ability and intent to pay, and the contract has commercial substance. At contract inception, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s payment history or, in the case of a new customer, the customer’s credit and financial information.

Contractual terms for Marketing Solutions contracts are generally 12 months or less. Customers are generally billed for a portion of the contract upon contract execution and then billed throughout the remainder of the contract based on various time-based milestones. Certain Marketing Solutions contracts are cancelable with a customary notice period. The Company does not refund customer payments, and customers are responsible for amounts invoiced where payment was not made upon cancellation. The contractual term for Hiring Solutions contracts is generally 12 months. Hiring Solutions contracts are noncancelable and customers are billed in annual, quarterly, or monthly installments in advance of the service period.

2) Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract.

Marketing Solutions customers may purchase a subscription for a specific module to be used over a defined period of time. These customers may purchase more than one module with either the same or different subscription periods. Modules are the core building blocks of the customers’ marketing plan and can be broadly categorized as Awareness, Interactivity, and Peer. As an example, the Company’s Awareness modules may include a sponsored article, short animated videos or other short-form content that is presented to the targeted member.

Each module targets a consistent number of Doximity members per month for the duration of the subscription period. The Company treats each subscription to a specific module as a distinct performance obligation because each module is capable of being distinct as the customer can benefit from the subscription to each module on their own and each subscription can be sold standalone. Furthermore, the subscriptions to individual modules are distinct in the context of the contract as (1) the Company is not integrating the services with other services promised in the contract into a bundle of services that represent a combined output, (2) the subscriptions to specific modules do not significantly modify or customize the subscription to another module, and (3) the specific modules are not highly interdependent or highly interrelated. The subscription to each module is treated as a series of distinct performance obligations because it is distinct and substantially the same, satisfied over time, and has the same measure of progress.

Marketing Solutions customers may also purchase integrated subscriptions for a fixed subscription fee that are not tied to a single module but allow customers to utilize any combination of modules during the subscription period, subject to limits on the total number of modules launched in a given period of time, active at any given time, and members targeted. These represent stand-ready obligations in that the delivery of the underlying sponsored content is within the control of the customer and the extent of use in any given period does not diminish the remaining services.

Subscriptions to Hiring Solutions provide customers access to the platform to place targeted job postings and send a fixed number of monthly messages. Each subscription is treated as a series of distinct performance obligations that are satisfied over time.

3) Determine the transaction price

The transaction price is determined based on the consideration the Company expects to be entitled to in exchange for transferring services to the customer. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue recognized under the contract will not occur.

The Company may generate sales through the use of third-party media agencies that are authorized to enter into contracts on behalf of an end customer. The Company acts as the principal in these transactions since it maintains control prior to transferring the service to the customer and is primarily responsible for the fulfillment that occurs through the Company’s platform. The Company records revenue for the amount to which it is entitled from the third-party media agencies as the Company does not know and expects not to know the price charged by the third-party media agencies to its customers.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental entities.

4) Allocate the transaction price to performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative stand-alone selling price (“SSP”). The determination of a SSP for each distinct performance obligation requires judgment. The Company determines SSP for performance obligations based on historical arrangements sold on a standalone basis. To the extent historical sales are not available or do not provide sufficient evidence, the Company estimates the SSP by taking into account overall pricing objectives, which take into consideration market conditions and customer-specific factors, including a review of internal discounting tables, the type of services being sold, and other factors. The Company believes the use of its estimation approach and allocation of the transaction price on a relative SSP basis to each performance obligation results in revenue recognition in a manner consistent with the underlying economics of the transaction and the allocation principle included in ASC 606.

5) Recognize revenue when or as the Company satisfies a performance obligation

Revenue is recognized when or as control of the promised goods or service is transferred to the customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. Subscriptions represent a series of distinct goods or services because the performance obligations are satisfied over time as customers simultaneously receive and consume the benefits related to the services as the Company performs. In the case of module specific subscriptions, a consistent level of service is provided during each monthly period the sponsored content is available on the Company’s platform. The Company commences revenue recognition when the first content is launched on the platform for the initial monthly period and revenue is recognized over time as each subsequent content period is delivered. The Company’s obligation for its integrated subscriptions is to stand-ready throughout the subscription period; therefore, the Company considers an output method of time to measure progress towards satisfaction of its obligations, with revenue commencing upon the beginning of the subscription period.

The Company treats Hiring Solutions subscriptions as a single performance obligation that represents a series of distinct performance obligations that is satisfied over time. Revenue recognition commences when the customer receives access to the services and is recognized ratably over the subscription period.

Other revenue consists of fees earned from the temporary staffing and permanent placement of healthcare professionals. Revenue is recognized when control of these services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.

Revenue Disaggregation

Revenue consisted of the following (in thousands):


	Three Months Ended September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
Subscription	$	129,639	$	106,654	$	249,607	$	207,909
Other	7,193		6,958		13,901		14,172
Total revenue	$	136,832	$	113,612	$	263,508	$	222,081

Contract Balances

Timing of revenue recognition may differ from the timing of invoicing to customers. Marketing Solutions customers are generally billed for a portion of the contract upon contract execution and then billed throughout the remainder of the contract based on various time-based milestones, starting when the tailored content is first shared on the Doximity platform. Hiring Solutions customers are generally billed periodically throughout the service period. The Company’s contracts do not contain significant financing components.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The Company records unbilled revenue when revenue is recognized in amounts for which it is contractually entitled but exceeds the amounts the Company has a right to bill as of the end of the period. The Company records unbilled revenue on the condensed consolidated balance sheets within prepaid expenses and other current assets. The Company’s unbilled revenue balances were $1.3 million and $2.3 million as of September 30, 2024 and March 31, 2024, respectively.

Deferred revenue consists of noncancelable customer billings or payments received in advance of revenue recognition. Deferred revenue balances are generally expected to be recognized within 12 months. Since the majority of the Company’s contracts have a duration of one year or less, the Company has elected not to disclose remaining performance obligations in accordance with the optional exemption in ASC 606. Remaining performance obligations for contracts with an original duration greater than one year are not material.

Revenue recognized for the three months ended September 30, 2024 and 2023 from amounts included in deferred revenue as of the beginning of the period was $76.0 million and $71.4 million, respectively. Revenue recognized for the six months ended September 30, 2024 and 2023 from amounts included in deferred revenue as of the beginning of the period was $89.9 million and $97.1 million, respectively.

Deferred Contract Costs

The Company capitalizes sales compensation that is considered to be an incremental and recoverable cost of obtaining a contract with a customer. The Company pays commissions based on signing new arrangements with customers and upon renewals and expansion of existing contracts with customers.

Deferred compensation is generally amortized over the weighted-average contractual term, ranging from 7 months to 14 months. The portion of deferred compensation expected to be recognized within one year of the balance sheet date is included in prepaid expenses and other current assets, and the remaining portion is recorded as other assets on the condensed consolidated balance sheets. The amortization of deferred contract costs is included in sales and marketing expense in the condensed consolidated statements of operations. Sales compensation that is not considered an incremental cost is expensed in the same period that it was earned.

The Company capitalized $1.8 million and $3.2 million of contract acquisition costs for the three and six months ended September 30, 2024, respectively, and $1.2 million and $2.4 million of contract acquisition costs for the three and six months ended September 30, 2023. Amortization of deferred contract costs was $2.1 million and $4.8 million for the three and six months ended September 30, 2024, respectively, and $2.0 million and $4.7 million for the three and six months ended September 30, 2023. As of September 30, 2024, the Company’s current and non-current deferred contract cost balances were $3.4 million and $0.5 million, respectively. As of March 31, 2024, the Company’s current and non-current deferred contract cost balances were $5.0 million and $0.4 million, respectively.

Deferred contract costs are periodically analyzed for impairment. There were no impairment losses relating to deferred contract costs during the three and six months ended September 30, 2024 and 2023.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

4. Investments

The cost, gross unrealized gains and losses, and fair value of investments are as follows (in thousands):


	As of September 30, 2024
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash equivalents:
Commercial paper	$	14,949	$	2	$	(1)	$	14,950

Money market funds	123,972		—		—		123,972

Total cash equivalents	138,921		2		(1)		138,922
Marketable securities:


Commercial paper	49,639		59		—		49,698
Corporate notes and bonds	460,784		2,990		(41)		463,733

U.S. government and agency securities	107,308		571		—		107,879

Total marketable securities	617,731		3,620		(41)		621,310
Total cash equivalents and marketable securities	$	756,652	$	3,622	$	(42)	$	760,232

As of September 30, 2024, the contractual maturities of the Company’s available-for-sale debt securities were as follows (in thousands):


	Fair Value
Due within one year	$	397,730
Due in one to two years	238,530

Total	$	636,260

Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay certain obligations.

The cost, gross unrealized gains and losses, and fair value of investments were as follows (in thousands):


	As of March 31, 2024
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash equivalents:

Corporate notes and bonds	$	1,180	$	—	$	—	$	1,180
Money market funds	83,049		—		—		83,049

Total cash equivalents	84,229		—		—		84,229
Marketable securities:
Asset-backed securities	121		—		—		121

Commercial paper	70,804		1		(50)		70,755
Corporate notes and bonds	225,880		133		(191)		225,822
Sovereign bonds	7,749		—		(73)		7,676
U.S. government and agency securities	365,123		2		(3,384)		361,741
Total marketable securities	669,677		136		(3,698)		666,115
Total cash equivalents and marketable securities	$	753,906	$	136	$	(3,698)	$	750,344

As of September 30, 2024 and March 31, 2024, the Company has recognized accrued interest of $4.9 million and $3.8 million, respectively, which is included in prepaid expenses and other current assets in the condensed consolidated balance sheets.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

As the Company does not intend to sell the securities with unrealized losses and it is more likely than not that the Company will hold these securities until maturity or until the cost basis is recovered, the Company did not recognize any impairment on these securities as of September 30, 2024 or March 31, 2024. The Company did not recognize any credit losses related to the Company’s debt securities as of September 30, 2024 or March 31, 2024. The fair value related to the debt securities with unrealized losses for which no credit losses were recognized was $52.4 million and $547.5 million as of September 30, 2024 and March 31, 2024, respectively.

The following tables summarize the gross unrealized losses and fair values of investments in an unrealized loss position, aggregated by security type and length of time that the individual securities have been in a continuous unrealized loss position (in thousands):


	As of September 30, 2024
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses


Commercial paper	$	4,496	$	(1)	$	—	$	—	$	4,496	$	(1)
Corporate notes and bonds	47,935		(41)		—		—		47,935		(41)


Total	$	52,431	$	(42)	$	—	$	—	$	52,431	$	(42)


	As of March 31, 2024
	Less than 12 months				12 months or greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Asset-backed securities	$	—	$	—	$	121	$	—	$	121	$	—

Commercial paper	67,336		(50)		—		—		67,336		(50)
Corporate notes and bonds	131,443		(191)		—		—		131,443		(191)
Sovereign bonds	—		—		7,676		(73)		7,676		(73)
U.S. government and agency securities	81,130		(139)		259,784		(3,245)		340,914		(3,384)
Total	$	279,909	$	(380)	$	267,581	$	(3,318)	$	547,490	$	(3,698)

5. Fair Value Measurements

Available-for-sale debt securities are recorded at fair value on the condensed consolidated balance sheets. The carrying value of cash equivalents, accounts receivable, accounts payable, and accrued expenses and other current liabilities approximate their respective fair values due to their short maturities.

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a three-tier hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Inputs that are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2—Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The following tables present the fair value hierarchy for the Company’s assets and liabilities measured at fair value on a recurring basis (in thousands):


	As of September 30, 2024
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Commercial paper	$	—	$	14,950	$	—	$	14,950

Money market funds	123,972		—		—		123,972

Total cash equivalents	123,972		14,950		—		138,922
Marketable securities:


Commercial paper	—		49,698		—		49,698
Corporate notes and bonds	—		463,733		—		463,733

U.S. government and agency securities	104,844		3,035		—		107,879

Total marketable securities	104,844		516,466		—		621,310
Total cash equivalents and marketable securities	$	228,816	$	531,416	$	—	$	760,232

Liabilities:
Contingent earn-out consideration liability	$	—	$	—	$	11,236	$	11,236
Total contingent earn-out consideration liability	$	—	$	—	$	11,236	$	11,236


	As of March 31, 2024
	Level 1		Level 2		Level 3		Total
Cash equivalents:

Corporate notes and bonds	$	—	$	1,180	$	—	$	1,180
Money market funds	83,049		—		—		83,049

Total cash equivalents	83,049		1,180		—		84,229
Marketable securities:
Asset-backed securities	—		121		—		121

Commercial paper	—		70,755		—		70,755
Corporate notes and bonds	—		225,822		—		225,822
Sovereign bonds	—		7,676		—		7,676
U.S. government and agency securities	355,804		5,937		—		361,741
Total marketable securities	355,804		310,311		—		666,115
Total cash equivalents and marketable securities	$	438,853	$	311,491	$	—	$	750,344

Liabilities:
Contingent earn-out consideration liability	$	—	$	—	$	16,813	$	16,813
Total contingent earn-out consideration liability	$	—	$	—	$	16,813	$	16,813

During the six months ended September 30, 2024 and 2023, the Company had no transfers between levels of the fair value hierarchy.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Contingent Earn-out Consideration Liability

The following table summarizes the changes in the contingent earn-out consideration liability (in thousands):


	Six Months Ended September 30,
	2024		2023
Beginning fair value	$	16,813	$	21,862
Additions in the period	—		—
Change in fair value	423		316
Payments	(6,000)		(6,000)
Ending fair value	$	11,236	$	16,178

The contingent earn-out consideration liability relates to the AMiON acquisition, which closed on April 1, 2022. The fair value of the liability is remeasured at each reporting date until the related contingency is resolved, with any changes to the fair value recognized as sales and marketing expense in the condensed consolidated statements of operations.

To determine the fair value of the contingent earn-out consideration liability, the Company used the discounted cash flow method. The significant inputs used in the fair value measurement of the contingent earn-out consideration liability are the discount rate and the timing and amounts of the future payments, which are based upon estimates of future achievement of the performance metrics. As these inputs are not based on observable market data, they represent a Level 3 measurement within the fair value hierarchy. Changes in the significant inputs used would significantly impact the fair value of the contingent earn-out consideration liability.

6. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	September 30, 2024		March 31, 2024
Furniture and equipment	$	2,140	$	2,833
Computers and software	689		745
Leasehold improvements	815		992
Internal-use software development costs	30,892		26,827
Total property and equipment	34,536		31,397
Less: accumulated depreciation and amortization	(21,718)		(19,079)
Total property and equipment, net	$	12,818	$	12,318

Depreciation and amortization expense on property and equipment was $1.6 million and $3.1 million for the three and six months ended September 30, 2024, respectively, and $1.4 million and $2.8 million for the three and six months ended September 30, 2023, respectively. Included in these amounts was amortization expense for internal-use software development costs of $1.4 million and $2.7 million for the three and six months ended September 30, 2024, respectively, and $1.2 million and $2.4 million for the three and six months ended September 30, 2023, respectively. The amortization of the internal-use software development costs is included in cost of revenue in the condensed consolidated statements of operations.

During the three and six months ended September 30, 2024, the Company capitalized $2.0 million and $4.0 million, respectively, and during the three and six months ended September 30, 2023, capitalized $1.5 million and $3.3 million, respectively, of internal-use software development costs, which are included in property and equipment, net in the condensed consolidated balance sheets.

During the three and six months ended September 30, 2024, an immaterial impairment charge was recognized on property and equipment. See Note 11 for further details. No impairment was recognized on property and equipment during the three and six months ended September 30, 2023.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	September 30, 2024		March 31, 2024
Accrued commissions	$	4,338	$	5,404
Accrued payroll, bonus, and related expenses	8,493		8,513
Employee contributions under employee stock purchase plan	568		496
Rebate liabilities	1,504		995
Sales and other tax liabilities	2,350		2,978
Income taxes payable	5,353		—
Current portion of contingent earn-out consideration liability	5,767		5,918

Share repurchase liability	104		4,000
Transferable federal tax credits payable	—		11,040
Other	5,063		4,359
Total accrued expenses and other current liabilities	$	33,540	$	43,703

8. Intangible Assets and Goodwill

Intangible Assets

Intangible assets, net consisted of the following (in thousands):


	September 30, 2024		March 31, 2024
Customer relationships	$	37,069	$	37,069
Other intangibles	1,531		1,531
Total intangible assets	38,600		38,600
Less: accumulated amortization	(13,405)		(11,283)
Total intangible assets, net	$	25,195	$	27,317

Amortization expense for intangible assets was $1.0 million and $1.2 million for three months ended September 30, 2024 and 2023, respectively, and $2.1 million and $2.4 million for the six months ended September 30, 2024 and 2023, respectively.

No impairment charges on intangible assets were recorded during the three and six months ended September 30, 2024 and 2023.

As of September 30, 2024, future amortization expense is as follows (in thousands):


Year Ending March 31,	Amount
Remainder of 2025	$	2,123
2026	4,012
2027	4,010
2028	4,010
2029	4,010
2030	4,010
Thereafter	3,020
Total future amortization expense	$	25,195

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Goodwill

As of September 30, 2024 and March 31, 2024, the Company’s goodwill balance was $67.9 million. No impairment charges on goodwill were recorded during the three and six months ended September 30, 2024 and 2023.

9. Equity

Preferred Stock

In connection with the IPO, the Company’s amended and restated certificate of incorporation became effective, which authorized the issuance of 100,000,000 shares of undesignated preferred stock with a par value of $0.001 per share with rights and preferences, including voting rights, designated from time to time by the board of directors. As of September 30, 2024 and March 31, 2024, there were no shares of preferred stock issued and outstanding.

Common Stock and Creation of Dual-Class Structure

The Company has two classes of common stock authorized: Class A common stock and Class B common stock, and are collectively referred to as common stock throughout the notes to the condensed consolidated financial statements, unless otherwise noted. On June 8, 2021, the Company’s board of directors and stockholders approved an amendment to the Company’s amended and restated certificate of incorporation which authorized 1,000,000,000 shares of Class A common stock with par value of $0.001 and one vote per share, and 500,000,000 shares of Class B common stock with par value of $0.001 and ten votes per share. The holders of common stock are entitled to receive dividends, as may be declared by the board of directors. Each of the Company’s 85,523,836 shares of then-existing common stock outstanding was reclassified into Class B common stock. Each outstanding share of Class B common stock may be converted at any time at the option of the holder into one share of Class A common stock. As of September 30, 2024, there were 128,216,478 shares of Class A common stock, and 58,564,170 shares of Class B common stock outstanding.

Stock Repurchase Program

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.

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.

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.

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.

Common Stock Warrants

In March 2017, the Company issued a warrant to purchase 250,000 shares of common stock at an exercise price of $0.72 per share in connection with a contract signed between the Company and U.S. News & World Report, L.P., or U.S. News. All shares under the warrant were exercised as of March 31, 2024 for an aggregate intrinsic value of $6.7 million.

In October 2021, the Company issued a warrant to U.S. News (the “U.S. News Warrant”) to purchase 516,000 shares of Class A common stock with an exercise price of $12.56 per share in connection with the execution of a commercial agreement with U.S. News. The U.S. News Warrant expires 10 years from the date of grant. The first tranche of the U.S. News Warrant vested on May 1, 2022 and the remainder will vest on a monthly basis over approximately 6 years. The grant-date fair value of the U.S. News Warrant was $34.7 million, which was determined using the Black-Scholes option-pricing model on the date of

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

grant. The fair value of the warrant is recognized as expense in cost of revenue in the condensed consolidated statements of operations on a straight-line basis over its vesting term of 6.48 years. During the six months ended September 30, 2024 and 2023, $2.7 million was recognized as stock-based compensation expense relating to the U.S. News Warrant. During the six months ended September 30, 2024, 200,667 shares with an intrinsic value of $3.6 million were exercised under the warrant. The remaining 315,333 shares under the warrant were outstanding as of September 30, 2024. As of September 30, 2024, unamortized stock-based compensation expense related to the unvested warrants was $18.8 million, which is expected to be recognized over the remaining vesting period of 3.50 years.

Equity Incentive Plans

The Company maintains three equity incentive plans: the 2010 Equity Incentive Plan (the “2010 Plan”), the 2021 Stock Option and Incentive Plan (the “2021 Plan”), and the 2021 Employee Stock Purchase Plan (the “ESPP”). Upon IPO, the 2021 Plan became effective and the 2010 Plan was terminated. The 2010 Plan continues to govern the terms of outstanding awards that were granted prior to the termination of the 2010 Plan. The 2021 Plan provides for the granting of incentive stock options, nonstatutory stock options, restricted stock units, and restricted stock awards to employees, non-employee directors, and consultants of the Company.

The Company granted stock options under the terms of the Plans and outside of the Plans, as approved by the board of directors. During fiscal 2018, the Company granted 4,682,582 options outside of the Plans, of which 2,044,582 options were exercised and 2,638,000 were outstanding as of September 30, 2024.

The Company has shares of common stock reserved for issuance as follows (in thousands):


			September 30, 2024
Common stock warrants			315
2010 Plan
Options outstanding			12,737
2021 Plan
Awards outstanding			4,185
Shares available for future grant			40,572
2021 ESPP			9,812
Options outstanding outside the plans			2,638
Total			70,259

Stock Options

Stock options granted generally vest over four years with service-based, performance-based, and/or market-based conditions and expire ten years from the date of grant.

Stock option activities within the Plans as well as outside of the Plans were as follows:


	Number of Shares (in thousands)	Weighted-Average Exercise Price		Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Balance, March 31, 2024	17,480	$	4.60	5.72	$	389,931
Options exercised	(2,024)	3.82
Options forfeited or expired	(81)	7.41
Balance, September 30, 2024	15,375	4.69		5.32	597,777
Vested and exercisable as of September 30, 2024	11,265	3.57		4.94	450,577
Vested and expected to vest as of September 30, 2024	15,375	4.69		5.32	597,777

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DOXIMITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The aggregate intrinsic value of options exercised during the six months ended September 30, 2024 and 2023 was $55.1 million and $61.8 million, respectively.

As of September 30, 2024, unamortized stock-based compensation expense related to unvested stock options was $15.9 million, which is expected to be recognized over a weighted-average period of 2.34 years.

The Company has not granted any stock options since the first quarter of fiscal 2022.

Restricted Stock Units (“RSUs”)

RSUs granted by the Company generally vest over three or four years based on continued service.

The following table summarizes RSU activity (in thousands, except per share information):


	Number of Shares	Weighted- Average Grant Date Fair Value
Unvested balance, March 31, 2024	2,093	$	33.79
Granted	2,599	25.87
Vested	(731)	30.52
Forfeited	(87)	28.26
Unvested balance, September 30, 2024	3,874	29.22

The total fair value of RSUs vested during the six months ended September 30, 2024 and 2023 was $21.9 million and $11.3 million, respectively.

As of September 30, 2024, total unrecognized stock-based compensation expense related to unvested RSUs was $104.2 million, which is expected to be recognized over a weighted-average period of 2.42 years.

Performance-Based Restricted Stock Units (“PSUs”)

During the six months ended September 30, 2024, the Company granted 4,897 PSUs that are subject to both service-based and performance-based vesting conditions. During the six months ended September 30, 2024, 66,654 PSUs vested. As of September 30, 2024, the unamortized stock-based compensation expense related to unvested PSUs was $1.4 million. The amount to be recognized will be based on the extent the performance metrics are achieved.

Stock-Based Compensation Expense

Total stock-based compensation expense recognized in the condensed consolidated statements of operations was as follows (in thousands):


	Three Months Ended September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
Cost of revenue	$	2,661	$	2,278	$	5,555	$	4,739
Research and development	5,447		2,538		10,131		5,794
Sales and marketing	6,808		2,697		13,394		8,692
General and administrative	2,952		2,288		5,878		4,577
Restructuring	—		3,646		—		3,646
Total stock-based compensation expense	$	17,868	$	13,447	$	34,958	$	27,448

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DOXIMITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

10. Net Income Per Share Attributable to Common Stockholders

The following table presents the reconciliation of the numerator and denominator for calculating basic and diluted net income per share (in thousands, except per share data):


	Three Months Ended September 30,				Six Months Ended September 30,
	2024		2023		2024		2023
Numerator
Net income	$	44,154	$	30,602	$	85,531	$	59,008
Denominator
Weighted-average shares used in computing net income per share attributable to Class A and Class B common stockholders, basic	186,252		193,112		185,933		193,813
Dilutive effect of stock options	13,162		15,673		13,230		16,573
Dilutive effect of common stock warrants	—		122		—		122
Dilutive effect of other share-based awards	993		107		655		173
Weighted-average shares used in computing net income per share attributable to Class A and Class B common stockholders, diluted	200,407		209,014		199,818		210,681
Net income per share attributable to Class A and Class B common stockholders:
Basic	$	0.24	$	0.16	$	0.46	$	0.30
Diluted	$	0.22	$	0.15	$	0.43	$	0.28

Certain potentially dilutive securities have been excluded from the calculation of diluted net income per share during the applicable periods because their inclusion would have been anti-dilutive (in thousands):


	Three Months Ended September 30,		Six Months Ended September 30,
	2024	2023	2024	2023

Other share-based awards	271	1,665	626	911

Common stock warrants	405	516	460	516
Total	676	2,181	1,086	1,427

11. Restructuring Expense and Impairment Charge

Restructuring Expense

In August 2023, the Company announced a restructuring plan (the “Restructuring Plan”) intended to simplify the Company’s operations and better align the Company’s resources with its priorities. The Restructuring Plan included a reduction of the Company’s workforce by approximately 10%. The Company incurred $7.9 million in restructuring expense in the second quarter of fiscal 2024 in connection with the workforce reduction under the Restructuring Plan, consisting of $4.3 million of severance payments and employee benefits and $3.6 million of stock-based compensation expense for the accelerated vesting of equity awards. The actions associated with the workforce reduction under the Restructuring Plan were completed as of March 31, 2024.

Impairment Charge

During the three months ended September 30, 2024, the Company executed a sublease for a portion of its Curative office space in Irving, Texas. The Company evaluated the associated asset group for impairment, which included the right-of-use assets and underlying property and equipment for the lease. The Company compared the expected future undiscounted cash flows to the carrying value and determined the respective asset group was not fully recoverable. The Company calculated the fair value based on the present value of the estimated cash flows from the sublease for the remaining lease term and compared the estimated fair value to its carrying value, which resulted in a $2.3 million impairment charge. The fair value of the operating lease right-of-use assets and associated property and equipment was estimated as of the sublease execution date using level 3

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DOXIMITY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

inputs based on an income approach by converting future sublease cash inflows and outflows to a single present value. Estimated cash flows were discounted at a rate commensurate with the inherent risks associated with the asset group to arrive at an estimate of fair value. The impairment charge was included in restructuring and impairment charge in the consolidated statements of operations.

12. Commitments and Contingencies

Contractual Commitments

The Company has contractual commitments that relate mainly to third-party cloud infrastructure agreements and subscription agreements, which are used to facilitate the Company’s operations.

Indemnification

The Company enters into indemnification provisions under agreements with other companies in the ordinary course of business, including, but not limited to, clients, business partners, landlords, and other parties involved in the performance of the Company’s services. Pursuant to these arrangements, the Company has agreed to indemnify, hold harmless, and reimburse the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company’s activities. The terms of these indemnification agreements are generally perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements. The Company maintains commercial general liability insurance and product liability insurance that may offset certain of its potential liabilities under these indemnification provisions.

In addition, the Company has agreed to indemnify its officers and directors and certain key employees while they are serving in good faith in their respective capacities. To date, there have been no material claims under these indemnification provisions.

Legal Matters

Beginning in April 2024, the Company and certain of our directors and officers have been named in lawsuits in the United States District Court for the Northern District of California. The first lawsuit is captioned In re Doximity, Inc. Securities Litigation, No. 5:24-cv-02281-EKL (N.D. Cal.). The operative complaint brings securities law claims on behalf of a putative class of our investors from June 24, 2021 and August 8, 2023 against the Company and our CEO related to our disclosure of user count and engagement rates. Two shareholder derivative lawsuits have also been filed and are consolidated under the caption In re Doximity, Inc. Derivative Litigation, No. 5:24-cv-02801-EKL (N.D. Cal.). The complaints assert claims for, among other things, breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste against certain of our directors and officers on a similar basis to the securities lawsuit. Other similar lawsuits or proceedings may be initiated in the future. The defendants intend to defend vigorously against these actions. In light of, among other things, the early stage of the litigation, the Company is unable to predict the outcome of these matters and is unable to reasonably estimate the amount or range of loss, if any, that could result from an unfavorable outcome.

From time to ti

Doximity, Inc. [DOCS] Filings
10-Q	[2024-11-07]
10-Q	[2024-08-08]
10-K	[2024-05-23]
10-Q	[2024-02-08]
10-Q	[2023-11-09]
10-Q	[2023-08-08]
10-K	[2023-05-26]
10-Q	[2023-02-09]
10-Q	[2022-11-10]
10-Q	[2022-08-05]
10-K	[2022-05-27]
10-Q	[2022-02-09]
10-Q	[2021-11-10]
10-Q	[2021-08-12]
S-1	[2021-05-28]