Doximity AKA "LinkedIn for Doctors" is a business in declining health with major risks not accounted for by Wall Street.
As discussed many times in the healthcare professional (HCP) and investment communities, the primary end use case of Doximity among its user base of HCPs is not its social media platform but its dialer or phone number masking service, even as Doximity's revenue largely comes from pharmaceutical companies advertising on its platform in the platform's scrollable Newsfeed.
Doximity's accounting shows peculiar growth. I am diagnosing this growth not as a benign but as malignant.
In a market that has seen significant recent pullback among ad names like Reddit (RDDT), The Trade Deck (TTD), and AppLovin (APP) Doximity is highly exposed.
- Doximity's revenue accounting and reported business metrics have become a joke. It's very obvious that Doximity is pulling forward revenue on large accounts as their longer-tail customers churn. That their auditor for many years Deloitte seems to be failing to execute on basic account standards shows how out of control this revenue accounting has become under CFO Anna Bryson.
- Doximity operates one of the most absurd "pre-populated" social networks in existence, in which doctors and other HCPs are bullied into signing up for Doximity to manage their professional profiles else they may have incorrect information about them syndicated to US News & World Report and other sources of medical information and rankings. There is major risk in Doximity losing California HCPs and HCPs in other states with laws regulating processes requiring HCPs to upload IDs and collect data off HCPs as a requirement for these professionals to "claim" a pre-populated profile about them. This process has for years boosted Doximity engagement and usage metrics.
- Doximity CEO Jeff Tangney was previously cofounder and CEO at Epocrates, which went public and endured the same practices of shifting revenue forward as the actual sales of the business failed.