Doximity trades at $64.99 per share and has stayed right on track with the overall market, gaining 23.6% over the last six months. At the same time, the S&P 500 has returned 21.1%.

Is DOCS a buy right now? Find out in our full research report, it’s free for active Edge members.

Why Are We Positive On DOCS?

With over 80% of U.S. physicians as members of its digital community, Doximity (NYSE: DOCS) operates a digital platform that enables physicians and other healthcare professionals to collaborate, stay current with medical news, manage their careers, and conduct virtual patient visits.

1. Billings Surge, Boosting Cash On Hand

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Doximity’s billings punched in at $148.9 million in Q2, and over the last four quarters, its year-on-year growth averaged 19.8%. This performance was impressive, indicating robust customer demand. The high level of cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth.

2. Customer Acquisition Costs Are Recovered in Record Time

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

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 indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Doximity more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.

3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Doximity has shown terrific cash profitability, driven by its lucrative business model and cost-effective customer acquisition strategy that enable it to stay ahead of the competition through investments in new products rather than sales and marketing. The company’s free cash flow margin was among the best in the software sector, averaging an eye-popping 48.7% over the last year.

Final Judgment

These are just a few reasons why we think Doximity is a high-quality business, but at $64.99 per share (or 20.4× forward price-to-sales), is now the right time to buy the stock? See for yourself in our in-depth research report, it’s free for active Edge members.

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