What Happened:

Shares of healthcare professional network Doximity (NYSE:DOCS) jumped 21.2% in the pre-market session after the company reported a "beat and raise" quarter. Doximity beat on revenue, adjusted EBITDA, and EPS in the quarter. Next quarter's revenue and adjusted EBITDA guidance both came in higher than Wall Street's estimates. The company called out strong contributions from existing customers, which drove a net revenue retention rate of 114%. Notably, net revenue retention for the top 20 customers came in even higher at 122%. Furthermore, the company raised its full-year revenue and adjusted EBITDA guidance. Notably, the company expects a 10%+ growth from its Pharma customers (representing over three-quarters of revenue) and flattish growth from health system customers. Overall, this was a solid quarter for Doximity.

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What is the market telling us:

Doximity's shares are very volatile and over the last year have had 7 moves greater than 5%. But moves this big are very rare even for Doximity and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 6 months ago, when the stock gained 29% on the news that the company reported a classic "beat and raise" quarter that investors love. Third quarter results beat Wall Street's expectations for revenue and handily beat expectations for Adjusted EBITDA and EPS. Additionally, it was good to see Doximity's optimistic revenue and adjusted EBITDA guidance for the next quarter, which exceeded analysts' expectations. Lastly, revenue and adjusted EBITDA guidance for the full year were both raised from the previous outlook given last quarter. Overall, we think this was a strong quarter with no major flaws that should satisfy shareholders.

Doximity is down 3.2% since the beginning of the year, and at $27.65 per share it is trading 22.8% below its 52-week high of $35.83 from July 2023. Investors who bought $1,000 worth of Doximity's shares at the IPO in June 2021 would now be looking at an investment worth $521.70.

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