Doximity Q3 EPS Beats by 4.5% but Gross Margin Slumps, Shares Tumble
Doximity delivered Q3 adjusted EPS of $0.46, up 2.2% year-over-year, beating estimates by 4.5%, and reported revenues of $185.1 million, up 10% and 2.3% above forecasts. Despite these beats, gross margin contracted 170 basis points to 89.9%, operating margin fell 855 basis points to 38.9%, and shares plunged 38.5% after hours.
1. Q3 Financial Results
Doximity reported adjusted EPS of $0.46 for fiscal Q3 2026, a 2.2% increase year-over-year that exceeded consensus by 4.5%. Revenues reached $185.1 million, up 10% annually and 2.3% above estimates, driven by subscription revenue of $175.4 million (+8.1%) and other revenue of $9.7 million (+52.6%).
2. Margin and Expense Trends
Gross profit rose 7.7% to $166.4 million, but gross margin contracted 170 basis points to 89.9%. Operating expenses climbed 26.8% to $94.5 million—led by R&D (+54.3%), G&A (+29.9%) and S&M (+9.6%)—causing operating margin to shrink 855 basis points to 38.9%.
3. After-Hours Stock Reaction
Shares fell 38.5% in after-hours trading despite beating top- and bottom-line estimates, reflecting investor concerns over margin erosion and elevated expense growth. Cash and equivalents declined to $64.8 million from $169.2 million in the prior quarter.
4. Outlook and Guidance
For Q4 fiscal 2026, Doximity projects revenues of $143–144 million versus $149.8 million consensus. Full-year revenue guidance was narrowed to $642.5–643.5 million from $640–646 million, slightly below the $645.3 million consensus estimate.