Doximity, Inc.: Form 10-Q for the period ended Sep 30, 2025

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and accompanying notes that are included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K, filed with the SEC on May 20, 2025. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, as described under the heading “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” in Part 1, Item 1A of our Annual Report on Form 10-K or in other parts of this Quarterly Report on Form 10-Q. Our historical results are not necessarily indicative of the results that may be expected for any period in the future, and our interim results are not necessarily indicative of the results that may be expected for the full fiscal year or any other period. The last day of our fiscal year is March 31st. Our fiscal quarters end on June 30th, September 30th, December 31st, and March 31st. Fiscal 2026, our current fiscal year, will end on March 31, 2026.

Overview

We are the leading digital platform for U.S. medical professionals, as measured by the number of members. Our members include more than 80% of U.S. physicians, spanning all 50 states and every medical specialty.

Our mission is to help every physician be more productive and provide better care for their patients. We are physicians-first, putting technology to work for doctors instead of the other way around. That guiding principle has enabled Doximity to become an essential and trusted professional platform for physicians and their colleagues. Doximity puts modern software in the hands of physicians and other medical professionals. We provide our members with digital tools specifically built for medicine, enabling our members to collaborate with colleagues, stay up to date with the latest medical news and research, manage their careers and on-call schedules, streamline documentation and administrative paperwork, and conduct virtual patient visits.

At the core of our platform is the largest medical professional network in the nation, which creates proximity within our community of doctors and other medical professionals. Verified members can search and connect with colleagues and specialists, which allows them to better coordinate patient care and streamline referrals. Our newsfeed addresses the ever increasing sub-specialization of medical expertise and volume of medical research by delivering news and information that is relevant to each physician's clinical practice. We also support physicians in their day-to-day practice of medicine with mobile-friendly and easy-to-use workflow tools such as voice and video dialer, secure messaging, digital faxing, and our AI-powered workflow tools. Our business model is designed to both respect and support physicians while driving value for our customers through our Marketing, Hiring, and Workflow Solutions. Our revenue-generating customers, primarily pharmaceutical manufacturers and health systems, have access to a suite of commercial solutions that benefit from broad physician usage.

Our business model has delivered high revenue growth at scale with profitability. For the three months ended September 30, 2025 and 2024, we recognized revenue of $168.5 million and $136.8 million, respectively, representing a year-over-year growth rate of 23%. For the six months ended September 30, 2025 and 2024, we recognized revenue of $314.4 million and $263.5 million, respectively, representing a year-over-year growth rate of 19%. For the three months ended September 30, 2025 and 2024, our net income was $62.1 million and $44.2 million and our adjusted EBITDA was $100.8 million and $76.1 million, respectively. For the six months ended September 30, 2025 and 2024, our net income was $115.4 million and $85.5 million and our adjusted EBITDA was $180.6 million and $142.1 million, respectively. We have accomplished this while focusing on our core mission to help every physician be more productive and provide better care for their patients.

Key Business and Financial Metrics

We monitor a number of key business and financial metrics to assess the health and success of our business, including:

Customers with Trailing 12-Month Subscription Revenue Greater than $500,000. The number of customers with trailing 12-month (“TTM”) subscription revenue greater than $500,000 is a key indicator of the scale of our business, and is calculated by counting the number of customers that contributed more than $500,000 in subscription revenue in the TTM period. Our customer count is subject to adjustments for acquisitions, consolidations, spin-offs, and other market activity, and we present our total customer count for historical periods reflecting these adjustments.

The number of customers with at least $500,000 of revenue has grown steadily in recent years as we have engaged new customers and expanded within existing ones. This cohort of customers accounted for approximately 84% of our revenue for the TTM ended September 30, 2025.

Net Revenue Retention Rate. Net revenue retention rate is calculated by taking the TTM subscription-based revenue from our customers that had revenue in the prior TTM period and dividing that by the total subscription-based revenue for the prior TTM period. For the purposes of this calculation, subscription revenue excludes subscriptions for individuals and small practices and other non-recurring items. Our net revenue retention rate compares our subscription revenue from the same set of customers across comparable periods, and reflects customer renewals, expansion, contraction, and churn. Our net revenue retention rate is directly tied to our revenue growth rate and thus fluctuates as that growth rate fluctuates.

Non-GAAP Financial Measures

We use adjusted EBITDA and free cash flow to measure our performance, identify trends, formulate financial projections, and make strategic decisions.

Adjusted EBITDA

We define adjusted EBITDA as net income before interest, income taxes, depreciation, and amortization, and as further adjusted for acquisition and other related expenses, stock-based compensation expense, impairment charge, legal fees associated with certain non-ordinary course legal matters including the shareholder class action litigation, change in fair value of contingent earn-out consideration liability, and other income, net. Net income margin represents net income as a percentage of revenue and adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue.

Adjusted EBITDA is a key measure we use to assess our financial performance and is also used for internal planning and forecasting purposes. We believe adjusted EBITDA is helpful to investors, analysts, and other interested parties because it can assist in providing a more consistent and comparable overview of our operations across our historical financial periods.

Adjusted EBITDA and adjusted EBITDA margin are non-GAAP measures and are presented for supplemental informational purposes only and should not be considered as alternatives or substitutes to the financial information presented in accordance with GAAP. These measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations that are necessary to run our business. Other companies, including other companies in our industry, may not use these measures or may calculate these measures differently than as presented in this Quarterly Report on Form 10-Q, limiting their usefulness as comparative measures.

The following table presents a reconciliation of net income to adjusted EBITDA, adjusted EBITDA margin, and net income margin (in thousands, except percentages):

Free Cash Flow

Free cash flow is a key performance measure that our management uses to assess our overall performance. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening our financial position.

We calculate free cash flow as cash flow from operating activities less purchases of property and equipment and internal-use software development costs.

Although we believe free cash flow is a useful indicator of business performance, free cash flow is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP. Free cash flow has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities. Some of the limitations of free cash flow are that it may not properly reflect future contractual commitments that have not been realized in the current period. Our free cash flow may not be comparable to similarly titled measures of other companies because they may not calculate free cash flow in the same manner as we calculate the measure, limiting its usefulness as a comparative measure.

The following table presents a reconciliation of our free cash flow to the most comparable GAAP measure, net cash provided by operating activities, for each of the periods indicated (in thousands):

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Components of Results of Operations

Revenue

Marketing Solutions. Our customers purchase a subscription to Marketing Solutions, either directly or through marketing agencies, for the ability to share tailored content on the Doximity platform via a variety of modules for defined time periods. We generally bill customers a portion of the contract upon contract execution and then bill throughout the remainder of the contract based on various time-based milestones. Generally, we bill in advance of revenue recognition. When revenue is recognized in advance of billings, we record unbilled revenue. Unbilled revenue is recorded on the condensed consolidated balance sheets within prepaid expenses and other current assets. Subscriptions to Marketing Solutions include the following contractual arrangements:

• Subscriptions for specific modules delivered on a monthly basis to a consistent number of targeted Doximity members during the subscription period.
• Integrated and other subscriptions that are not tied to a single module per month but allow customers to utilize a given module or combination of modules during the subscription period, subject to limits on the total number of modules launched in a given period of time, active at any given time, and members targeted.

For these subscription-based contractual arrangements, pricing is based on the number and composition of the targeted Doximity members, and on the specific modules purchased. We recognize revenue over time as control of the service is transferred to the customer.

Hiring and Workflow Solutions. We provide Hiring Solutions customers access to our platform which enables them to post job openings or deliver a fixed number of monthly messages to our network of medical professionals. We offer Workflow Solutions customers access to telehealth tools, on-call scheduling, and our AI writing assistant during the subscription period. Hiring and Workflow Solutions contracts are noncancelable and customers are billed in annual, quarterly, or monthly installments in advance of the service period, and revenue is recognized ratably over the contractual term.

We also generate revenue from temporary and permanent medical recruiting services which we charge on an hourly-fee, and retainer and placement-fee basis, respectively. For the three and six months ended September 30, 2025 and 2024, the revenue from temporary and permanent medical recruiting services was not significant to our total revenue.

For a description of our revenue accounting policies, see Note 2—Summary of Significant Accounting Policies included in Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 and filed with the SEC on May 20, 2025.

Cost of Revenue

Cost of revenue is primarily comprised of expenses related to cloud hosting, personnel-related expenses for our customer success team, costs for third-party platform access, information technology, software subscription costs, and other services used in connection with the delivery and support of our platform. Our cost of revenue also includes the amortization of internal-use software development costs, editorial and other content-related expenses, and allocated overhead. Cost of revenue is driven by the growth of our member network and utilization of our workflow tools. We intend to continue to invest additional resources in our cloud infrastructure and our customer support organizations to support the growth of our business.

Gross Profit and Gross Margin

Gross profit is total revenue less total cost of revenue. Gross margin is gross profit expressed as a percentage of total revenue. Gross profit and gross margin has been and will continue to be affected by a number of factors, including the timing of our acquisition of new customers and sales of additional solutions to existing customers, the timing and extent of our investments in our operations, cloud hosting costs, growth in our customer success team, and the timing of internal-use software development costs amortization. We expect our gross margin to remain relatively steady over the near term, although our quarterly gross margin is expected to fluctuate from period to period depending on the interplay of these and other factors.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses.

Research and Development

Research and development expense is primarily comprised of personnel-related expenses associated with our engineering and product teams who are responsible for building new products and improving existing products. Research and development expense also includes costs for information technology, software-related costs, contractors, third-party services, amortization of acquired intangibles, and allocated overhead. Other than internal-use software development costs that qualify for capitalization, research and development costs are expensed as incurred. We expect research and development expenses will increase on an absolute dollar basis as we continue to grow our platform and product offerings.

Sales and Marketing

Sales and marketing expense is primarily comprised of personnel-related expenses, sales incentive compensation, advertising costs, travel, and other event expenses. Sales and marketing expense also includes costs for information technology, software-related costs, contractors, third-party services, allocated overhead, intangible assets amortization, and change in fair value of contingent earn-out consideration liability. We capitalize sales incentive compensation that is considered to be an incremental and recoverable cost of obtaining a contract with a customer. These sales incentive compensation costs are amortized over the period of benefit. We expect sales and marketing expense to increase and to be our largest expense on an absolute basis.

General and Administrative

General and administrative expense is primarily comprised of personnel-related expenses associated with our executive, finance, legal, human resources, information technology, and facilities employees. General and administrative expense includes fees for third-party legal and accounting services, insurance expense, information technology, software-related costs, and allocated overhead. We expect that general and administrative expense will increase on an absolute dollar basis as we incur compliance costs associated with being a publicly-traded company, including legal, audit, and consulting fees.

Impairment Charge

Impairment charge includes impairment of right-of-use and other property and equipment recognized upon the execution of a sublease for a portion of our office space.

Other Income, Net

Other income, net consists primarily of interest income earned on our cash equivalents and marketable securities.

Provision for Income Taxes

Provision for income taxes consists primarily of income taxes in U.S. federal, state, and local jurisdictions in which we conduct business. We continue to maintain a valuation allowance related to specific net deferred tax assets where it is not more likely than not that the deferred tax assets will be realized, which includes Arizona research and development credits and capital loss carryforwards. We calculate income taxes in interim periods by applying an estimated annual effective tax rate to income before income taxes and by calculating the tax effect of discrete items recognized during the period. Our effective income tax rate generally differs from the U.S. statutory tax rate of 21.0% primarily due to stock-based compensation related tax benefits, which are subject to limitations for certain executive officers under IRC section 162(m), and federal and state research and development tax credits.

Results of Operations

The following tables set forth our condensed consolidated results of operations data and such data as a percentage of revenue for the periods presented.

(in thousands)

(1) Costs and expenses include stock-based compensation expense as follows:

(in thousands)

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Comparison of the three and six months ended September 30, 2025 and 2024.

Revenue

(in thousands, except percentages)

Revenue for the three months ended September 30, 2025 increased $31.7 million as compared to the same period in 2024. The increase was primarily driven by a $29.8 million increase in subscription revenue. Of the increase in subscription revenue, $9.3 million was driven by the addition of new subscription customers1 and $20.5 million was due to the expansion of existing customers. The expansion of existing customers was primarily driven by average revenue per existing Marketing Solutions customers increasing by approximately 20% as a result of adding new and growing existing brands and service lines. Approximately 95% of our revenue for the three months ended September 30, 2025 was derived from subscription customers.

Revenue for the six months ended September 30, 2025 increased $50.9 million as compared to the same period in 2024. The increase was primarily driven by a $47.7 million increase in subscription revenue. Of the increase in subscription revenue, $11.0 million was driven by the addition of new subscription customers1 and $36.7 million was due to the expansion of existing customers. The expansion of existing customers was primarily driven by average revenue per existing Marketing Solutions customers increasing by approximately 18% as a result of adding new and growing existing brands and service lines. Approximately 95% of our revenue for the six months ended September 30, 2025 was derived from subscription customers.

Cost of revenue, gross profit and gross margin

(in thousands, except percentages)

Cost of revenue for the three and six months ended September 30, 2025 increased $2.7 million and $5.0 million as compared to the same periods in 2024. The increase was primarily driven by increases in personnel, hosting, and other costs to support revenue growth.

The gross margin for the three and six months ended September 30, 2025 remained consistent as compared to the same period in 2024.

Operating Expenses

Research and development

(in thousands, except percentages)

Research and development expense for the three months ended September 30, 2025 increased $7.0 million as compared to the same period in 2024. The increase was driven by a $4.4 million increase in stock-based compensation as a result of new awards granted to new hires and existing employees, a $1.4 million increase in third-party contractor costs, and a $1.1 million increase in personnel costs due to merit increases and increases in average headcount.

1 We define new subscription customers as revenue generating subscription customers in the current fiscal period who did not contribute any revenue for the same period in the prior fiscal year.

Research and development expense for the six months ended September 30, 2025 increased $11.2 million as compared to the same period in 2024. The increase was driven by a $6.4 million increase in stock-based compensation as a result of new awards granted to new hires and existing employees, a $2.5 million increase in personnel costs due to merit increases and increases in average headcount, and a $2.0 million increase in third-party contractor costs.

Sales and marketing

(in thousands, except percentages)

Sales and marketing expense for the three months ended September 30, 2025 increased $4.8 million as compared to the same period in 2024, primarily driven by $3.7 million increase in stock-based compensation as a result of new awards granted to new hires and existing employees, and $1.3 million increase in marketing activities.

Sales and marketing expense for the six months ended September 30, 2025 increased $5.9 million as compared to the same period in 2024, primarily driven by a $4.8 million increase in stock-based compensation as a result of new awards granted to new hires and existing employees, and a $2.0 million increase in marketing activities.

General and administrative

(in thousands, except percentages)

General and administrative expense for the three months ended September 30, 2025 increased $8.9 million as compared to the same period in 2024, primarily driven by $3.9 million increase in legal expenses, $3.3 million increase in stock-based compensation as a result of new awards granted to new hires and existing employees, and a $1.2 million increase related to acquisition expenses.

General and administrative expense for the six months ended September 30, 2025 increased $12.1 million as compared to the same period in 2024, primarily driven by a $4.9 million increase in stock-based compensation as a result of new awards granted to new hires and existing employees, $4.6 million increase in legal and accounting expenses, a $1.6 million increase related to acquisition expenses, and a $0.8 million increase in personnel costs due to merit increases.

Impairment charge

(in thousands, except percentages)

During the three and six months ended September 30, 2024, the Company executed a sublease for its Curative office space in Irving, Texas, which resulted in a $2.3 million impairment charge for the subleased asset group.

Other income, net

(in thousands, except percentages)

Other income, net for the three months ended September 30, 2025 remained materially consistent as compared to the same period in 2024.

Other income, net for the six months ended September 30, 2025 increased $2.7 million as compared to the same period in 2024, primarily driven by increases in interest income due to higher yields earned on our cash equivalents and marketable securities portfolio and a higher average portfolio balance.

Provision for income taxes

(in thousands, except percentages)

Income tax expense for the three and six months ended September 30, 2025 decreased $7.1 million and $8.1 million as compared to the same periods in 2024, primarily driven by increased tax deductions from stock award activities offset in part by higher income before taxes.

Liquidity and Capital Resources

Since inception, we have financed operations primarily through proceeds received from sales of equity securities and payments received from our customers. As of September 30, 2025, our principal sources of liquidity were cash and cash equivalents and marketable securities of $878.4 million. Our marketable securities consist of U.S. government and agency securities, corporate notes and bonds, and commercial paper.

On May 1, 2024 the Company’s board of directors authorized a program to repurchase up to $500 million of the Company’s Class A common stock with no expiration date. As of September 30, 2025, the Company repurchased and retired 4,496,467 shares of Class A common stock under this program for an aggregate purchase price of $220.2 million and $279.8 million remained available and authorized for repurchase.

All repurchases are subject to general business and market conditions and other investment opportunities and may be executed through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans. Immediately upon the repurchase of any shares of Class A common stock, such shares shall be retired by the Company and shall automatically return to the status of authorized but unissued shares of Class A common stock.

Effective January 1, 2023, the Company’s share repurchases in excess of allowable share issuances are subject to a 1% excise tax as a result of the Inflation Reduction Act of 2022. As of September 30, 2025, the Company had accrued excise taxes of $0.3 million and nil as of March 31, 2025.

We believe that our existing cash and cash equivalents and marketable securities will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.

Our future capital requirements will depend on many factors, including our revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, timing of share repurchases, and the timing and extent of spending to support research and development efforts. Further, we may in the future enter into arrangements to acquire or invest in businesses and technologies. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected.

We have not entered into any off-balance sheet arrangements and do not have any holdings in variable interest entities.

For further details regarding our cash requirements from noncancelable operating lease obligations and other contractual commitments, see Note 13—Commitments and Contingencies and Note 14—Leases included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Cash Flows

(in thousands)

Net cash provided by operating activities

Cash provided by operating activities was $156.0 million for the six months ended September 30, 2025. This consisted of net income of $115.4 million, adjusted for non-cash items of $60.5 million and a net outflow from operating assets and liabilities of $19.8 million. Non-cash items primarily consisted of stock-based compensation expense of $51.3 million, depreciation and amortization expense of $6.3 million, amortization of deferred contract costs of $6.8 million, and non-cash lease expense of $0.9 million, partially offset by the accretion of discount on marketable securities of $4.7 million. The net outflow from operating assets and liabilities was driven by a $14.3 million decrease in deferred revenue due to the timing of customer billings and program launches, a $4.5 million increase in deferred contract costs, a $2.3 million decrease in accounts payable, accrued expenses, and other liabilities, a $1.1 million decrease in operating lease liabilities, and a $1.0 million increase in accounts receivable due to the timing of billings and collections. The outflows were partially offset by a $3.5 million decrease in prepaid expenses and other assets primarily due to prepaid taxes.

Cash provided by operating activities was $109.6 million for the six months ended September 30, 2024. This consisted of net income of $85.5 million, adjusted for non-cash items of $42.9 million and a net outflow from operating assets and liabilities of $18.8 million. Non-cash items primarily consisted of stock-based compensation expense of $35.0 million, depreciation and amortization expense of $5.2 million, amortization of deferred contract costs of $4.8 million, impairment of long-lived assets of $2.3 million, and non-cash lease expense of $1.0 million, partially offset by the accretion of discount on marketable securities of $5.4 million. The net outflow from operating assets and liabilities was driven by a $23.5 million increase in accounts receivable due to the timing of billings and collections, a $5.5 million decrease in accounts payable, accrued expenses, and other liabilities which was primarily due to the timing of income tax and transferable tax credit payments, a $5.5 million decrease in deferred revenue due to the timing of customer billings and program launches, and a $3.2 million increase in deferred contract costs. The outflows were partially offset by a $19.9 million decrease in prepaid expenses and other assets primarily due to prepaid taxes.

Net cash provided by (used in) investing activities

Cash used in investing activities was $29.0 million for the six months ended September 30, 2025, which primarily consisted of $268.2 million of marketable securities purchases, $26.5 million cash paid for acquisition, and $4.3 million for internal-use software development costs, partially offset by proceeds from the maturities of marketable securities of $270.0 million.

Cash provided by investing activities was $54.1 million for the six months ended September 30, 2024, which primarily consisted of proceeds from the maturities of marketable securities of $417.9 million and $7.2 million of proceeds from the sale of marketable securities, partially offset by $367.8 million of marketable securities purchases and $3.2 million for internal-use software development costs.

Net cash used in financing activities

Cash used in financing activities was $167.4 million for the six months ended September 30, 2025, which primarily consisted of common stock repurchases of $144.2 million, $24.5 million of taxes paid related to the net share settlement of equity awards, and $5.2 million of payments for contingent consideration related to the AMiON acquisition. These payments were partially offset by $4.8 million of proceeds from the exercise of stock options and common stock warrants and $1.8 million of proceeds from the issuance of common stock in connection with the employee stock purchase plan.

Cash used in financing activities was $76.2 million for the six months ended September 30, 2024, which primarily consisted of common stock repurchases of $74.2 million, $5.5 million of payments for contingent consideration related to the AMiON acquisition, and $8.2 million of taxes paid related to the net share settlement of equity awards. These payments were partially offset by $10.2 million of proceeds from the exercise of stock options and common stock warrants, and $1.4 million of proceeds from the issuance of common stock in connection with the Company’s employee stock purchase plan.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of our financial statements also requires us to make estimates and assumptions that affect the amounts stated in the condensed consolidated financial statements and accompanying notes. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.

There have been no material changes to our critical accounting policies and estimates during the three and six months ended September 30, 2025 as compared to those described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” set forth in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 and filed with the SEC on May 20, 2025.

Recent Accounting Pronouncements

Refer to Note 2—Summary of Significant Accounting Policies included in Part I, Item 1 of this Quarterly Report on Form 10-Q for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.

Substantially all of our operations are within the United States and we do not have any foreign currency exposure. We are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and inflation.

Interest Rate Risk

Our cash and cash equivalents and marketable securities primarily consist of cash on hand and highly liquid investments in money market funds, corporate notes and bonds, commercial paper, and U.S. government and agency securities. As of September 30, 2025, we had cash and cash equivalents of $169.2 million and marketable securities of $709.1 million. We do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income and the fair value of our investments. Fixed rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates.

A hypothetical 100 basis point increase in interest rates would have resulted in a decrease of $5.0 million and $5.4 million, respectively, in the market value of our cash equivalents and marketable securities as of September 30, 2025 and March 31, 2025. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur. Fluctuations in the value of our investments caused by a change in interest rates are recorded in other comprehensive income and are realized in net income only if we sell the underlying securities.

Impact of Inflation

We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, financial condition, and results of operations.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating our disclosure controls and procedures, our management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the disclosure controls and procedures are met. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Our operations and financial results are subject to various risks and uncertainties, including the factors discussed in this Quarterly Report on Form 10-Q, our consolidated financial statements and the related notes thereto and the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025 (“Annual Report”),which could adversely affect our business, financial conditions and future results. Other than the risk factors set forth below, there have been no material changes from the risk factors discussed in our Annual Report.

We may become subject to litigation, which could have a material adverse effect on our business, financial condition, and results of operations.

We are currently subject to litigation, have been subject to litigation in the past, and may become subject to litigation in the future. Some of these claims may result in significant defense costs and potentially significant judgments against us, some of which we are not, or cannot be, insured against. We generally intend to defend ourselves vigorously; however, we cannot be certain of the ultimate outcomes of any claims currently pending or that may arise in the future. Resolution of these types of matters against us may result in our having to pay significant fines, judgments, or settlements, which, if uninsured, or if the fines, judgments, and settlements exceed insured levels, could adversely impact our earnings and cash flows, thereby having a material adverse effect on our business, financial condition, results of operations, cash flow, and per share trading price of our Class A common stock. Certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage, which could adversely impact our results of operations and cash flows, expose us to increased risks that would be uninsured, and adversely impact our ability to attract directors and officers. Certain litigation or the resolution of certain litigation could damage our reputation or relationships with existing or potential customers and employees, make it more difficult to compete effectively and result in a diversion of management’s attention and resources, which could have a material adverse effect on our business, financial condition and results of operations.

We may seek to grow our business through acquisitions of, or investments in, new or complementary businesses, technologies, tools, or solutions, or through strategic alliances, and the failure to manage these acquisitions, investments or alliances, or to integrate them with our existing business, could have a material adverse effect on us.

We have completed acquisitions in recent years, including Curative Talent in fiscal 2021, AMiON in fiscal 2023and Pathway Medical in July 2025, and we may in the future consider opportunities to acquire or make additional investments in new or complementary businesses, technologies, offerings, tools, or solutions, or enter into strategic alliances, that may enhance our capabilities and platform in general, complement our current offerings, or expand the breadth of our markets. Our ability to successfully grow through these types of strategic transactions depends upon our ability to identify, negotiate, acquire, and integrate suitable target businesses, technologies, tools, and solutions and to obtain any necessary financing, and is subject to numerous risks, including:

• failure to identify acquisition, investment, or other strategic alliance opportunities that we deem suitable or available on favorable terms;
• problems integrating the acquired business, technologies, tools, or solutions, including issues maintaining uniform standards, procedures, controls, and policies;
• integrating personnel from the acquired company;
• unanticipated costs associated with acquisitions, investments, or strategic alliances;
• adverse impacts on our overall margins;
• diversion of management’s attention from our existing business;
• risks associated with entering new markets in which we may have limited or no experience;
• potential loss of key employees of acquired businesses; and
• increased legal and accounting compliance costs.

In addition, a significant portion of the purchase price of companies we acquire may be allocated to acquired goodwill and other intangible assets. In the future, if our acquisitions do not yield expected returns, we may be required to take impairment charges to our results of operations based on our impairment assessment process, which could harm our results of operations.

We may experience challenges with managing the integration and growth related to these acquisitions or other future acquisitions. The operation and integration of the acquired technologies and business operations may require substantial financial costs and management attention. If we fail to manage such integration processes in a timely and effective manner, our business and financial results may suffer. If we are unable to identify suitable acquisitions or strategic relationships, or if we are unable to integrate any acquired businesses, technologies, tools, and solutions effectively, our business, financial condition, and results of operations could be materially and adversely affected. Also, while we employ several different methodologies to assess potential business opportunities, the new businesses may not meet or exceed our expectations.