Healthcare professional network Doximity (NYSE: DOCS) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 15.2% year on year to $145.9 million. On top of that, next quarter’s revenue guidance ($157.5 million at the midpoint) was surprisingly good and 5% above what analysts were expecting. Its non-GAAP profit of $0.36 per share was 17.2% above analysts’ consensus estimates.

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“We began our year with strong profit growth and record engagement across our newsfeed, workflow, and AI products,” said Jeff Tangney, co-founder and CEO of Doximity.

Company Overview

Founded in 2010 and named for a combination of “docs” and “proximity”, Doximity (NYSE: DOCS) is the leading social network for U.S. medical professionals.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, Doximity grew its sales at a 17.7% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds. Luckily, there are other things to like about Doximity.

This quarter, Doximity reported year-on-year revenue growth of 15.2%, and its $145.9 million of revenue exceeded Wall Street’s estimates by 4.5%. Company management is currently guiding for a 15.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 8.5% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and suggests its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

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Customer Acquisition Efficiency

The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.

Doximity is extremely efficient at acquiring new customers, and its CAC payback period checked in at 6.8 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.

Key Takeaways from Doximity’s Q2 Results

We were impressed by Doximity’s optimistic revenue and EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also excited this quarter's numbers outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 8.1% to $63.46 immediately following the results.

Sure, Doximity had a solid quarter, but if we look at the bigger picture, is this stock a buy? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.