Doximity Stock Falls Despite Q3 Earnings & Revenues Beat Estimates

Doximity, Inc. DOCS delivered adjusted earnings per share (EPS) of 46 cents in the third quarter of fiscal 2026, which increased 2.2% year over year. The figure surpassed the Zacks Consensus Estimate by 4.5%.

GAAP EPS for the quarter was 31 cents, reflecting a downtick of 16.2% from the year-ago figure.

DOCS’ Q3 Revenues in Detail

Doximity registered revenues of $185.1 million in the fiscal third quarter, up 10% year over year. The figure surpassed the Zacks Consensus Estimate by 2.3%.

Despite an earnings beat, shares of this company lost 38.5% in after-hours trading yesterday.

Doximity’s Segment Details

Doximity derives revenues from two sources: Subscription and Other.

In the third quarter of fiscal 2026, Subscription revenues totaled $175.4 million, up 8.1% year over year. This was driven by stronger spend from existing customers, reflected in a 112% net revenue retention rate and growth in large accounts, with 126 customers contributing over $500,000 and representing 84% of revenues.

The Other revenues totaled $9.7 million, up 52.6% year over year.

Doximity, Inc. Price, Consensus and EPS Surprise

Doximity, Inc. price-consensus-eps-surprise-chart | Doximity, Inc. Quote

DOCS’ Margin Trend

In the quarter under review, Doximity’s gross profit rose 7.7% year over year to $166.4 million. However, the gross margin contracted 170 basis points (bps) to 89.9%.

Sales and marketing expenses increased 9.6% year over year to $42.2 million, and research and development expenses rose 54.3% year over year to $34.6 million. General and administrative expenses increased 29.9% year over year to $17.7 million. Total operating expenses of $94.5 million rose 26.8% year over year.

The operating profit totaled $71.9 million, reflecting a 10% downtick from the prior-year quarter. The operating margin in the fiscal third quarter contracted 855 bps to 38.9%.

Doximity’s Financial Position

Doximity exited third-quarter fiscal 2026 with cash and cash equivalents of $64.8 million compared with $169.2 million at the fiscal second-quarter end.

Cumulative net cash provided by operating activities at the end of third-quarter fiscal 2026 was $216.9 million compared with $174.8 million a year ago.

DOCS’ Guidance for Q4 & FY26

Doximity has provided its financial outlook for the fourth quarter of fiscal 2026 and updated its outlook for the full fiscal year.

For the fiscal fourth quarter, the company expects revenues in the range of $143 million-$144 million. The Zacks Consensus Estimate is pegged at $149.8 million.

DOCS now projects its full fiscal year revenues between $642.5 million and $643.5 million, compared to the prior outlook of $640 million-$646 million. The Zacks Consensus Estimate is pegged at $645.3 million.

AI Adoption & Engagement Power Doximity’s Q3

Doximity exited the third quarter of fiscal 2026 with better-than-expected results and solid growth in its top and bottom lines. Robust performances by both its revenue sources were encouraging.

During the fiscal third quarter, Doximity demonstrated strong platform momentum, highlighted by expanding network scale, record engagement and accelerating adoption of its AI-enabled workflow tools. The company had 3 million registered members, reaching more than 85% of United States physicians and two-thirds of NPs and PAs, reinforcing its position as a dominant digital platform for medical professionals.

Engagement trends remained encouraging, with quarterly, monthly, weekly and daily active users all reaching new highs, while workflow solutions — including telehealth, scheduling, digital fax and AI tools — recorded their largest sequential user increase ever, with 720,000 active prescribers in the quarter. For the fifth consecutive year, Doximity Dialer secured the top position as the Best in KLAS Telehealth Platform, as ranked by health system CIOs and their teams, outpacing competing solutions such as Microsoft Teams, Zoom and others.

AI adoption emerged as another key growth driver. More than 300,000 prescribers used Doximity’s AI tools during the quarter, with DoxGPT demonstrating strong utilization and competitive differentiation through integrated clinical references, peer-reviewed data access and deterministic drug information. The company also made meaningful inroads into institutional adoption, with more than 100 leading health systems purchasing its AI Suite, covering over 180,000 prescribers. The quarter underscored Doximity’s strategy of deepening physician-centric workflow integration while positioning its trusted, clinically validated AI ecosystem for long-term commercialization opportunities.

However, the gross margin and operating margin contraction during the quarter were disappointing.

DOCS’ Zacks Rank and Other Key Picks

Doximity currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space that have announced quarterly results are Intuitive Surgical ISRG, Phibro Animal Health PAHC and Cardinal Health CAH.

Intuitive Surgical reported fourth-quarter 2025 adjusted EPS of $2.53, beating the Zacks Consensus Estimate by 12.4%. Revenues of $2.87 billion surpassed the Zacks Consensus Estimate by 4.7%. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical has a long-term estimated growth rate of 15.7%. ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 13.2%.

Phibro Animal Health reported second-quarter fiscal 2026 adjusted EPS of 87 cents, beating the Zacks Consensus Estimate by 26.1%. Revenues of $373.9 million topped the consensus mark by 4.7%. The company carries a Zacks Rank of 2 at present.

Phibro Animal Health has a long-term estimated growth rate of 12.8%. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 20.2%.

Cardinal Health reported second-quarter fiscal 2026 adjusted EPS of $2.63, beating the Zacks Consensus Estimate by 10%. Revenues of $65.6 billion surpassed the Zacks Consensus Estimate by 0.9%. The company currently carries a Zacks Rank #2.

Cardinal Health has a long-term estimated growth rate of 14.7%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.4%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research