Shares of Doximity (NYSE: DOCS) shot 28.4% higher last month after it reported quarterly earnings. The telehealth company's revenue grew 29% year over year, beating Wall Street's estimates for both sales and profits. It also provided positive forward-looking commentary on its advertising business.

Growth is necessary for Doximity's investment narrative, so shareholders were happy to see that 29% expansion. While the headlines indicate that net profit decreased relative to last year, a closer look reveals a more bullish picture. The company's EBITDA rose 40%, and free cash flow more than doubled. While net income is an important and valid measurement of profits, these alternative metrics show that the amount of cash actually flowing to the business outpaced revenue growth. 

Importantly, Doximity's commentary indicated that the company is likely to meet its full-year financial projections. Investors had begun to worry that soft economic conditions would prevent the company from meeting its financial goals. Many digital advertising businesses are struggling with challenges posed by inflation and slowing macroeconomic growth, which led to concerns about Doximity's advertising revenue. The telehealth platform offers valuable ad space to pharmaceutical companies and other businesses that market to doctors. That doesn't seem to be a major concern at the moment, which created serious momentum for Doximity stock.

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Source Fool.com