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DATE

May 13, 2026

CALL PARTICIPANTS

  • Co-Founder and Chief Executive Officer — Jeffrey A. Tangney
  • Chief Financial Officer — Matt Sonnefeld
  • Vice President, Investor Relations — Perry Scott Gold

TAKEAWAYS

  • Revenue -- $145 million for the quarter, up 5% year over year; $645 million for the fiscal year, reflecting 13% year-over-year growth.
  • Free cash flow -- $107 million for the quarter, the company's first nine-digit free cash flow quarter; $317 million for the fiscal year, an increase of 19% year over year.
  • Adjusted EBITDA -- $66 million for the quarter, with a 45% margin; $358 million for the fiscal year, marking a 55% margin.
  • Non-GAAP gross margin -- 89% for the quarter, versus 91% in the prior-year period, mainly due to increased AI compute costs; 91% for the fiscal year, compared to 92% previously.
  • Net revenue retention rate -- 109% on a trailing 12-month basis; top 20 customers posted a 114% net revenue retention rate.
  • Large revenue cohorts -- 125 customers each contributed at least $500,000 in subscription-based revenue over the past 12 months, up 6% from the prior year; these customers made up 83% of total revenue.
  • Share repurchases -- $91 million repurchased in the quarter; $432 million total in the fiscal year; $493 million remains under the current program.
  • Cash position -- Ended the year with $749 million in cash, equivalents, and marketable securities.
  • AI product penetration -- 800,000 unique quarterly active prescribers engaged with workflow tools, up 30% year over year; nearly half used AI tools.
  • Health system adoption -- 140 health systems, including seven of the top 20 hospitals, purchased the clinical AI suite; over 250,000 prescribers now have access.
  • AI search monetization -- Initial commercial AI search deals closed with top 20 pharmaceutical manufacturers; management forecasts "minimal AI revenue contribution this fiscal year" due to regulatory requirements and a nascent market.
  • Financial guidance -- Q1 revenue expected at $151 million to $152 million (4% growth at midpoint) and fiscal year revenue projected between $664 million and $676 million; adjusted EBITDA for the year forecasted at $323 million to $335 million, with a 49% margin.
  • Stock-based compensation -- Expected to rise to low 20s as a percent of revenue this year, primarily due to the Pathway acquisition and performance-based grants for the AI team.
  • AI platform usage -- AI search and scribe active users have tripled within nine months of the Pathway acquisition; recent user queries averaged 31 per month, nearly double January levels.
  • Clinical AI efficacy -- In a side-by-side evaluation with 4,700 physician residents, participants preferred Doximity's AI Answers product by a two-to-one margin.
  • Strategic partnerships -- Announced collaboration with Aledade to bring AI tools to thousands of primary care organizations; over 1,000 prescribers participated in the new e-prescribing beta.
  • Management hires -- Announced Matt Sonnefeld as new CFO and Dr. Steven Zatz as president, both bringing relevant platform and healthcare industry experience.

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RISKS

  • Management noted, "short term demand in the HCP digital pharma ad market is soft," with continued policy and macroeconomic uncertainty reducing visibility and resulting in more cautious, shorter-term client commitments.
  • Non-GAAP gross margin declined to 89% from 91% in the comparable period, primarily driven by increased AI compute costs.
  • "AI revenue will not really be significant until later this fiscal year because, again, of the regulatory needs and reviews," potentially delaying anticipated contribution from the new product line.
  • "There is more uncertainty. Policy and now macro. And I think as a result, a lot of these companies, a lot of the C-suite want to retain optionality," increasing the risk of less predictable bookings and spending cycles.

SUMMARY

Doximity (DOCS 11.08%) delivered revenue and free cash flow growth, supported by record physician engagement metrics and initial AI-derived functionality gain. The clinical AI suite achieved rapid penetration among major U.S. health systems and generated early demand from pharmaceutical clients, but the company communicated expectations for limited AI monetization in the near term due to regulatory complexity. Customer buying patterns shifted toward shorter commitments and incremental budget allocation, reflecting elevated industry caution and placing pressure on visibility and operational leverage.

  • Quarterly active workflow provider growth outpaced previous trends, while AI engagement rates increased at an even faster pace, indicating platform entrenchment in clinical settings.
  • Share repurchase activity escalated significantly year over year, indicating a commitment to offsetting dilution from higher stock-based compensation.
  • Management expressly stated that anticipated bottom-line margin compression is a result of aggressive investment in AI compute, R&D, and marketing adjacent to the "AI investment year" theme.
  • Initial pharma customer feedback revealed mandatory budget allocations for AI products of up to "In fact, a number of the top 20 pharma reported to us that they have minimum budget percentages—10%, 20%—of their budgets that from a top down perspective are part of their compensation plan that they should be spending on AI," among top manufacturers, corroborating market readiness for eventual expansion in the AI commercialization segment.
  • New management appointments with deep platform and healthcare domain expertise were highlighted as strategic to future execution on digital and AI initiatives.

INDUSTRY GLOSSARY

  • Workflow engagement: The measure of unique prescribers actively using Doximity's proprietary clinical workflow tools within a given time frame.
  • Net revenue retention rate: The percentage of recurring revenue retained from existing customers over a trailing 12-month period, accounting for expansions, contractions, and churn.
  • AI search: Doximity's artificial intelligence-driven product enabling targeted, context-specific queries and search-based insights for health care professionals and commercial pharmaceutical clients.
  • Clinical AI suite: The collection of Doximity's AI tools designed for direct clinical use, integrating with hospitals and health systems to support care delivery workflows.
  • HCP: Healthcare professional; includes physicians and prescribers targeted by Doximity's digital marketing and workflow solutions.
  • PeerCheck: Doximity's system for peer-reviewing AI-generated clinical answers by credentialed physicians, intended to address concerns around AI accuracy and trust in clinical contexts.

Full Conference Call Transcript

Jeffrey A. Tangney, Co Founder and CEO of Doximity and Matt Sonnefeld, our new CFO. A complete disclosure of our results can be found in our press release issued earlier today as well as in our related Form 8-Ks along with a copy of our prepared remarks all available on our website at investors.doximity.com. As a reminder, today's call is being recorded, and a replay will be available on our website. As part of our comments today, we will be making forward looking statements. These statements are based on management's current views, expectations, assumptions and are subject to various risks and uncertainties. Actual results may differ materially and we disclaim any obligation to update any forward looking statements or outlook.

Please refer to the risk factors in our annual report on Form 10 ks any subsequent Form 10 Qs, and our other reports and filings with the SEC that may be filed from time to time including our upcoming filing on form 10 k. Our forward looking statements are based on assumptions that we believe to be reasonable as of today's date 05/13/2026. Of note, it is Doximity's policy to neither reiterate nor adjust the financial guidance provided on today's call unless it is also done through a public disclosure such as a press release, or through the filing of a form 8-K.

Today, we will discuss certain non GAAP metrics that we believe aid in the understanding of financial results. A historical reconciliation to comparable GAAP metrics can be found in today's earnings release. Finally, during the call, we may offer incremental metrics to provide greater insights into the dynamics of our business. These details may be 1 time in nature, we may or may not provide updates on those metrics in the future. I would now like to turn the call over to our CEO and cofounder, Jeffrey Tangney. Jeffrey?

Jeffrey A. Tangney: Thanks, Perry, and thanks, everyone, for joining our fourth quarter earnings call. Today, I will cover our financials, our AI investment year, and a couple of key hires. First, our financials. Q4 ended above the high end of our guidance with a record $107 million in free cash flow, our first-ever 9-digit free cash flow quarter. Revenue was $145 million in Q4, up 5% year-on-year. For the full fiscal year ended March 31, revenue was $645 million, up 13% year-on-year. On the bottom line, our adjusted EBITDA margin was 45% in Q4, and 55% for the full year. Our full year free cash flow was $317 million, up 19% year-on-year. Okay.

Now to our AI strategy, what we are calling our AI investment year. Let me start with the headline. Nearly half of all US doctors now work at hospitals that buy our workflow or scheduling tools. And as we become more integrated into their EHRs, we are increasingly a daily use for them. Our benchmark workflow engagement reached over 800 thousand unique quarterly active prescribers in Q4 up roughly 30% year-on-year. A significant acceleration from the high single digit growth we saw a year ago. Nearly half of all these active prescribers used our AI tools in Q4. We saw record high engagement across our entire platform last quarter, as doctors increasingly turned to us to be their AI assistant.

In the 9 months since we acquired Pathway, our AI search and scribe active users have tripled. And last month, these users averaged 31 queries each, nearly double January's usage. In a side by side clinical search evaluation, completed by 4.7 thousand physician residents last quarter, respondents chose our AI Answers over our nearest competitor by 2-to-1. They prefer our built in drug reference, and peer review. Hospitals are choosing us too. As of today, 140 health systems have purchased our clinical AI suite. Including 7 of the top 20 hospitals. Over 250 thousand prescribers now have access to our clinical AI suite in a single hospital approved HIPAA compliant workflow. The race is on.

To build the best scribe and search AI for doctors. Our 380-person R&D team is all in to win this. And you will see a slew of new physician led features and agents from us in the coming months. I am excited to share 2 of them today. First, we partner with Alidade to provide value based care AI agents for their network of thousands of primary care organizations. They will use our scribe and clinical AI suite to save time and money. With them, we are bringing AI assistance not just to big hospitals, but to small town family physicians too. Second, we have added e prescribing to our platform.

So our doctors can write a prescription in a few taps after a telehealth call or while on the go. We save the doctor time and the patient money by letting the patient choose their preferred pharmacy from their phone. Over 1 thousand prescribers have participated in our beta so far with strong uptake in usage. The back end is powered by our partner, Photon Health. Okay. Now to AI monetization, which is an important part of today's call. Having grown our AI search footprint so much over the last year, we are ready to monetize against our clients' large paid search budgets.

We launched at our annual pharma client summit in New York last week, with 40 marketing leaders from the world's largest pharma companies in attendance. Their response was enthusiastic. Particularly around using our AI search surface to reach prescribers in the exact moments they are researching options. Something traditional paid search cannot do. We have already closed our first few AI search deals with top 20 pharma manufacturers, but these are early innings in a nascent and regulated market. And our financial guidance reflects that.

We have forecasted minimal AI revenue contribution this fiscal year while allowing for a wider range of AI investments, and related expenses meaning higher R&D, compute, and marketing spend that will weigh on near term margins. We think that is the right trade. Longer term, we believe AI search alone represents a multibillion dollar new TAM. On top of the existing pharma marketing budgets we serve today. To put it plainly, we paid $63 million for Pathway AI last summer, now we are spending against the opportunity it unlocked. This is our AI investment year. Finally, 2 management updates. As we announced last month, Anna Bryson made the difficult decision to step down as CFO after being on medical leave.

We all miss her, and wish her the very best. Today, we are pleased to announce Matt Sonnefeld as our new CFO. Over a 25 year career, Matt has led IR, finance, and strategy at LinkedIn, Atlassian, most recently, DocuSign. He began on the buy side at Capital Research, giving him a long term perspective across tech, Matt has advised us externally for over a year, and we know him well. he is a strong operator, a great cultural fit, and he joins us in our San Francisco office full time in early June. We are also pleased to welcome Dr. Steven Zatz as our new president.

A Cornell, Yale, and Harvard trained physician Steven spent 20 years at WebMD Medscape, with the last 7 as president and CEO. We have admired Steven's work from the other side of the field for years. he is advised us over the past 5 months, and it is been great to have him on our side. he is based near New York City and brings deep long standing relationships across the industry. To close, we have long been the largest US physician network. And this year, we are becoming the largest physician AI platform. it is a multibillion dollar opportunity, and we have the team, the tools, and the trust.

To win. that is the company we are investing to build this year. Thank you to my Doximity teammates who continue to work incredibly hard to care for those who care for us. With that, I will hand it over to our VP of investor relations, Perry Scott Gold. Perry?

Perry Scott Gold: Thanks, Jeffrey, and thanks to everyone on the call today. Fourth quarter revenue grew to $145 million up 5% year-over-year, exceeding the high end of our guidance range. Full year revenue grew to $645 million up 13% year-over-year. Our existing customers continue to lead our growth. We finished the quarter with a net revenue retention rate of 109% on a trailing 12-month basis. Our top 20 customers remained our fastest growing, with a net revenue retention rate of 114%. We ended the quarter with 125 customers contributing at least $500 thousand each subscription based revenue on a trailing 12-month basis.

This is a roughly 6% increase from the 118 customers that we had in this cohort a year ago, and these customers accounted for 83% of our total revenue. Turning to our profitability. Non GAAP gross margin in the fourth quarter was 89% versus 91% in the prior year period. Driven by AI compute costs. For the full fiscal year, non GAAP gross margin was 91% versus 92% last year. Adjusted EBITDA for the fourth quarter was $66 million, and adjusted EBITDA margin was 45%. Compared to $70 million and a 50% margin in the prior year period.

The primary driver for the change in EBITDA margin versus last year is our increased investment in AI compute, driven by a steep ramp in AI usage, which is outgrowing overall workflow engagement. We will continue this investment into fiscal 2020 and are excited about the engagement and commercial potential ahead. For the full fiscal year, adjusted EBITDA was $358 million and adjusted EBITDA margin was 55%. Compared to $314 million and a 55% margin last year. We are proud to continue to run a highly profitable business with 14% year-over-year growth in our bottom line. Now turning to our balance sheet cash flow, an update on our share repurchase program.

We generated free cash flow in the fourth quarter of $107 million compared to $97 million in the prior year period. An increase of 11% year-over-year. For the full fiscal year, we generated free cash flow of $317 million compared to $267 million last year, representing growth of 19% year-on-year. In addition, free cash flow was 49% of revenue for fiscal 2020. We ended the year with $749 million of cash equivalents, and marketable securities. During the fourth quarter, we repurchased $91 million of our shares bringing the total value of shares bought back in fiscal 2020 to $432 million. A significant step up versus the $116 million repurchase in fiscal 2020.

As of March 31, we had $493 million remaining in our existing repurchase program. Now moving on to our outlook. For the first quarter of fiscal 2027, we expect a revenue range of $151 million to $152 million representing 4% growth at the midpoint. And we expect adjusted EBITDA in the range of $68.5 million to $69.5 million representing a 46% adjusted EBITDA margin. For the full fiscal year, we expect revenue in the range of $664 million to $676 million representing 4% growth at the midpoint. And we expect adjusted EBITDA in the range of $323 million to $335 million. Representing a 49% adjusted EBITDA margin.

Additionally, we expect stock based comp to increase to the low 20s as a percent of revenue in fiscal 2020 and then trend back down starting in 2028. This is primarily the result of our pathway acquisition as well as performance based grants issued in fiscal 2020 for our growing AI team. That said, we expect dilution from these new awards to be more than offset by our share repurchases this year. Now I will provide more color on our outlook. We are witnessing a continuation of the trend discussed on our last call, with short term demand in the HCP digital pharma ad market is soft. And visibility is still limited.

This market environment is the result of policy uncertainty remaining elevated, and increased macro risk. Taken together, we expect overall market growth to be modest this year, likely at or below 5%. Consistent with broader industry trends, many brands still made meaningful upfront investments, but with more modest growth and shorter planning horizons than typical. As a result, we currently have 65% of our subscription based revenue guidance booked at this point, in line with our 3-year average. However, with more moderate growth incorporated into our guide than prior years. We are encouraged to see second half budget activity beginning to materialize from several brands that were initially more cautious during the upfront.

That said, shorter term spend commitments remain the norm across supplemental buys at a number of other brands. Within this environment, the dynamic we are seeing is relatively consistent. There is not much incremental budget available today, And when dollars do free up, brand managers are typically looking for 1 of 2 things. Innovative new offerings are low cost engagement options. In many ways, this feels very similar to what we experienced during the early days of HCP focused programmatic advertising. 3 years ago. We believe we are now well positioned to meet the demand for innovation with the recent launch of our commercial AI search offering.

Which is already generating strong early interest and allows us to tap into innovation focused budgets. We began selling the product in late April, and while we do not expect meaningful contribution in the first half of the fiscal year, we do anticipate a more notable ramp as we move into our fiscal back half. We were deliberate in how we built our AI monetization to be aligned with our physician first commitment. This focused approach has consistently proven to be a long term winner. Importantly, comparing our business to 3 years ago, our revenue and engagement are both up more than 50%. As a result, we believe we remain well positioned to outgrow the market over time.

Stepping back, despite the near term market pressure, our underlying fundamentals remain strong. Engagement is at record levels, Product velocity remains high. And we continue to strengthen our AI differentiation through peer check, our integrated platform approach, and our expanding health system distribution footprint. From a profitability standpoint, we remain committed to maintaining adjusted EBITDA margins in the high 40s or better in fiscal 2020. Even as we continue to invest in AI compute and PureCheck. And increase our brand marketing spend. As Jeff mentioned, workflow active provider growth accelerated to approximately 30% year-over-year, with AI engagement growing even faster. Reinforcing that our tools are becoming increasingly embedded in everyday clinical care.

We believe we are well positioned to capture a significant share this emerging growth vector while continuing to deliver strong profitability. As always, we remain focused on the long term by investing to expand our platform's clinical capabilities and delivering strong and measurable ROI for our customers. We believe we are still early in a multiyear shift towards AI driven health care workflows and we are excited about the opportunity ahead. With that, I will turn it over to the operator for questions.

Operator: Thank you, and we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press *1 on your telephone keypad to raise your hand and join the queue. If you are called upon to ask your question and are listening via speaker phone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to 1 question and 1 follow-up. Again, it is *1 to join the queue. And our first question comes from the line of Brian Peterson with Raymond James.

Your line is open.

Analyst (Brian Peterson): Thanks for taking the question, guys. So Jeff, I wanted to start on the AI search launch, and it is great to see a large customer win. Given that you have seen a few innovation cycles in pharma over the years, I am just curious how should we be thinking about the appetite for customers to invest in AI solutions? And as we are thinking about a maybe 2- to 3 year road map any sense for how big these AI products could be over that time frame?

Jeffrey A. Tangney: Thanks, Brian. This is Jeffrey. Yes, having just come back from New York last week, where we where we were with 40 of these top pharmaceutical marketing executives, I was surprised, honestly, by the degree to which they are really all leaned in on AI. In fact, a number of the top 20 pharma reported to us that they have minimum budget percentages—10%, 20%—of their budgets that from a top down perspective are part of their compensation plan that they should be spending on AI.

So, we are happy to offer them an AI product now that we have spent the first year post-pathway acquisition here focusing on physicians first, which we always do, and building a better, more accurate product with peer review, with the built in drug reference, with you know, over 10 thousand cited authors reviewing the results, and winning 2-to-1 in head-to-head to head studies with residents, But I will tell you, the pharma interest in all of this is quite high. It provides a lot of insight to them in addition to the being there at the place of learning and decision making. And they are understanding gaps, frankly, in their own products marketing, is really interesting.

And we are excited to have a whole day to spend with them, talk about how we can help them with that. So, in terms of the TAM, we do think it is a multibillion dollar TAM as we said in the prepared remarks. I mean, if you look at how much U.S. Pharma spent on paid search in all, and it is hard to know because it is you have to piece together some e marketer data with some Google data, but it is probably around $19 billion in overall US paid search. Now a lot of that is for consumers. So that is why we are saying multibillion dollar for health care professionals.

But we think it is a very large market, and it is incremental to the market we are in today. Today, you know, we are not considered to be part of the paid search market, and so we are excited to be entering that market this last week.

Analyst (Brian Peterson): Great. Appreciate the color, Jeffrey. And maybe just a follow-up on the budgets for calendar year 2026. I appreciate that it is a fluid environment, but are you seeing significant changes in how customers are buying just shorter term commitments? And I would love to understand how you guys are thinking about maybe midyear buying and kind of end of year buying that kind of underpins that 4% growth for the year. Thanks, guys.

Perry Scott Gold: Brian, it is Perry. How are you? Yeah. it is a great question. there is noticeable differences this year. I think the overarching theme is there is more uncertainty. Policy and now macro. And I think as a result, a lot of these companies, a lot of the C-suite want to retain optionality. And so we are seeing some of these incremental buys are just shorter duration. that is kind of, like, a consistent theme that is come up. that is a big 1. So I think that is that is kind of leading to less visibility for us. So that is kind of the broader theme.

I think the other thing I will call out and reference it in my script, it feels like when there is incremental budget, it they are looking for innovation, which we now have to offer or they are looking for the bargain bin. They are looking for some cheaper engagements. that is something that is that is a kind of a world we never really played in. We are a premium offering for positions. Native ad formats, and we do not play in kind of the banner ad cheaper by the pound space.

So I think we can now offer them what they are looking for that limited incremental budget they have. there is a lot of excitement around our AI search offering. But those are kind of the key the key trends we are seeing now.

Operator: Our next question comes from the line of Michael Cherny with Leerink Partners. Your line is open.

Analyst (Michael Cherny): Hello. Good evening, afternoon. Thanks for taking the question. Maybe if I can jump in on the AI thought process a bit. You mentioned in the script, you talked about the dynamics of offering innovation, and I appreciate all the components you have in place. You know, that being said, obviously, it is a competitive market. there is a lot of investment being made for Doctor. Eyeballs as you see it. As you think about the incremental investment being on compute spend, or other R&D spend or people, how are you best measuring yourself to make sure that this amount of spend you have this year is the right amount to further kick off and expand your AI journey.

Jeffrey A. Tangney: This is Jeffrey. I can take that. Thanks, Michael. it is a good question. And the reality is the amount we are spending on compute is going up dramatically, and that is a good thing. Honestly, we are helping more doctors answer more questions, take more notes than ever before. And that is probably the number 1 metric we have for ourselves and will have for ourselves this year. Is continuing to grow our AI usage among doctors. We want to be the physician's private AI assistant, I think we are well positioned to be that today. And I am really proud.

We grew 30% year-on-year in our workflow use the biggest jump we have ever had from 720 thousand to 800 thousand quarterly active prescribers. And, you know, to put that in perspective, 3 years ago, fiscal 2024, I mean, we have grown our engagement 50% since fiscal 24, so in fiscal 2024 to fiscal 2026. We have grown our revenue 50% or more in that same period. We have grown our free cash flow per share more than 2x during that period. I think the AI opportunity that lies in front of us now is similar to what we have had this last few years.

So we are excited to lean in and invest here A lot of it is compute, but a lot of it is also getting out with doctors, having them do the peer review, making sure that we continue to put the most accurate product out there in the--because if you ask doctors what they like about AI, there is a lot of things they will tell you, and we are delivering on those. But the number 1 concern they have, 71% of physicians who have used AI, a 3 thousand-physician survey that we ran a few months ago, the biggest concern is the accuracy of the AI.

And the reality is if you just hit the refresh button, you will get a different answer. And that is not very comforting just for someone who is putting their license on the line and making a very high stakes decision. For a patient. And so that is where our investment in having cited authors, you know, physicians who are experts in the field, do peer reviews, add practice pearls, make sure that the answers are correct, we think is a big, great, long term investment. Alongside the AI investments.

Analyst (Michael Cherny): Got it. I am good for now.

Operator: Thanks. And our next question comes from the line of Glenn Santangelo with Barclays. Your line is open.

Analyst (Glen Santangelo): Oh, yeah. Thanks for taking my questions. Just 2 quick ones for me. Hey, Jeffrey. I wanna talk about the HCP marketing business for a second. I mean, you highlighted the continued regulatory concerns. Could you elaborate on what those concerns are and how much you think that is impacting the market? Is it coming from IRA price reductions? Like what do you think is really causing the hesitation there?

And then secondly, with respect to sort of this new AI, the paid search offering, I am just kind of curious if you can give us a sense for maybe how the competitive landscape maybe is different here than your traditional marketing business and maybe what the margin might be on that incremental revenue stream? Thanks so much.

Jeffrey A. Tangney: Great. Thanks, Glenn. I will answer part of this, and I think Perry will jump in here with a bit more. So first, I have the word regulatory in my script, my prepared remarks here, and that was referring to our new AI product. And what it really boils down to is you know, they are buying keywords, but they are also buying suppression words and there is a lot that you have to figure out to make sure that you know, that the targeting around keywords is done correctly in a way that we are always proud of the way it appears. In front of a physician. Again, we thought long and hard about this.

We have tested it with our 160 doctors at our AI summit we had back here in San Francisco in March. And, again, I am very proud that our commercial offering with AI does not slow down the doctor at all. Others do. Others make you wait and watch an ad. We do not do that. We get you the answer you are looking for as fast as we can, and our pharma clients are on board with it that way with us.

But that does require some regulatory review and testing And so it is really just the reason why we think the AI revenue will not really be significant until later this fiscal year because, again, of the regulatory needs and reviews. Beyond that, the regulatory environment has not changed a whole lot. I mean, obviously, we have you know, FDA changes and lots of things happening. it is a more turbulent environment just generally. And that does lead to a bit of macro I would say, concern malaise. Mean, keep in mind most of our clients are European companies. Right? If you look at the top 20 pharma, this is, a European based group.

But we continue to do very well, again, in working with them and their regulatory teams and continuing to show them ROI, which in the end is really the most important thing.

Perry Scott Gold: Hey, Glenn. I will just add a little to what Jeffrey said. I think in terms of how this is different than some of our other sales, So what we are selling, it is a little different for the first time rather than you know, our advertisers looking to target certain HCPs. We are selling them conditions. Which is a basket of keywords. The product itself is more than just a native ad unit. it is a package. It also delivers insights. It delivers some retargeting capabilities, which makes our other products value of those products go up. there is better signal that is being brought in, better intent Being brought in.

So it is a bit of a different sale. And to Jeffrey's point, it is a little bit of a different regulatory approval process. So it will take a little longer to get these things up and running for the first time. But it I think it is incredibly additive and accretive to the entire product portfolio. We are really excited to be out selling this new product. Okay.

Analyst (Glen Santangelo): Thank you.

Operator: And our next question comes from the line of Elizabeth Anderson with Evercore ISI. Your line is open.

Analyst (Elizabeth Anderson): Hi, guys. Thanks so much for the question. I was wondering if you could talk a little bit more, it is a 2-parter, just about how you envision the gross, sorry, the margin structure for fiscal 2027? Should it be given some of those AI investments and the AI computing costs sort of similar to what we saw in the fourth quarter? Is that the right way to think about it or just help us sort of parse apart maybe some of those gross margin versus OpEx investments?

And then secondarily, can you go into a little bit more detail about the new CFO, sort of--you know, obviously, we saw his experience, but just any other sort of traits that you thought would be helpful for the business as you enter into this new era. Thank you.

Perry Scott Gold: Hey, Elizabeth. Yeah. I can take the margin question first. So I think the key things to look out for in fiscal 2020, for gross margin, I think the big step up will be AI compute. that is largely driven by kind of a big jump in engagement. The other piece, to a lesser extent, there is a lot of licensing costs for journals for docs, but that is that is a much lower piece of it. For the rest of kind of OpEx, you know, you now have a team that just got leveled So there is there is kind of the expense base is up a little bit.

We have a few more AI engineers you have got a full run rate of that spend this year. We have got some peer check investments that hit selling and marketing. And this year, I think for the first time, we are really leaning into brand marketing. I think what our product velocity is so high. there is so many new incredible AI features rolling out. We really wanna go out and make some noise around that and educate our physicians about it. And so I think that is an online presence. that is kind of a conference presence. We have a team internally that is kind of very focused on this now.

And so I think I think that is kind of an intentional investment that a little different than what you have seen for us in the past. We think it is it is a really good use of funds right now. I will pass the next question to Jeffrey. I will just say I have known Matt for many years. From my time covering LinkedIn on the sell side. Matt's fantastic. I am thrilled to have him here, but I will let Jeffrey take the rest of that.

Jeffrey A. Tangney: Yeah. I am excited to introduce Matt who is sitting right next to me here. So I will just say that we work with Matt for over a year as a consultant. He has just really been super helpful. I feel like he you know, a lot of the team already knew him, and when we started talking about who we would like and the types of attributes we would like in a CFO leadership role here. Matt just checked all the boxes. In particular his experience is very relevant for us.

I think the way that LinkedIn has, I think, been very professional, but also you know, high growth and built a marketing solutions business in particular using a portal. He helped inform a lot of that portal strategy for us a couple years ago, and that continues to do well. If we do not get a chance to say it later, we have doubled the number of portal users that we have year on year. And the portal is a perfect place to deploy more AI insights and more of the sort of search bidding and other things that Perry just talked about a moment ago.

So Matt's been not only, I think, a great leader here but also someone who brought a lot of industry expertise. So with that--Matt--oh, thank you, Elizabeth, for the question.

Analyst: I am incredibly excited to be here. I think for a lot of different reasons. I think when I look at Doximity you know, I see it as a company that has just incredible platform potential along the ways of other companies that I have been privileged to be a part of. Like, LinkedIn, like Atlassian, incredible brand. Like DocuSign. You know, for us, some of our assets are just the largest medical professional digital network. We have 800 thousand workflow users, just to say that again, with engagement that is accelerating behind a lot of the AI innovation that we are doing right now.

An incredible monetization machine that is grown over multiple cycles building on that strong engagement and relationship with medical professionals. As well. it is kind of underpinned by the relationship we have across health systems. I think when you look at I think the innovation that Doximity is investing in and creating right now, it can our pharma ad business in particular can really evolve from here into that search ad market, and that is something that LinkedIn did an incredible job over multiple years was evolving its ad business. And I think for me, it is really important to be a part of a special culture. Doximity has a special culture.

It thinks about physicians and medical professionals first, it makes investments and big choices focused on the long term. All of that makes it just an incredibly exciting place to be. And I cannot tell you how pumped I am to get started for this next several years. Great. I will just chime in quick and say, oh, sorry, that Matt's blog was named Culture for Breakfast. Which I love because, of course, culture does eat strategy for breakfast, and the culture here is something that he will be a very strong fit for.

Analyst (Elizabeth Anderson): Awesome. Thank you very much.

Operator: And our next question comes from the line of Ryan MacDonald with Needham and Company. Your line is open.

Analyst (Ryan MacDonald): Thanks for taking my questions. Jeffrey, as we think about the back half of the year and sort of the midyear upsells, and sort of year end budget flush, are you viewing the market opportunity and the demand environment as such that the new AI search product is really the only opportunity to unlock incremental budget from current levels. Then on the pricing side, I know you mentioned that you obviously do not sort of play down market in banner ads and sort of lower-priced options. But have you looked at or contemplating any sort of pricing changes this year to try to unlock maybe more demand as we go through into the back half Thanks. Thanks, Ryan.

Jeffrey A. Tangney: This is Jeffrey, and Perry might help me a bit with this. I will just say you know, as we get to this year end, we are excited to have an AI product. We did not have an AI product last year, year end, in the bigger part of the budget season. And we are excited too this year. In terms of do we expect growth from our non AI products? Absolutely. You know, the growth that we have seen in our telehealth business, I mean, we had 1 day this last quarter where we served 720 thousand patients. This was during the big snowstorms in the East Coast. No 1 else is at that scale.

Again, as we have shared, nearly half of all U. S. Physicians have an enterprise license to our telehealth service, and that is you know, a great opportunity for our clients to have you know, reach because they are waiting millions of minutes, during those visits with patients for the patients to fill out their consent forms and do other things, and that is a great learning opportunity. Right? it is a magic moment. The doctor's there. At their desk at home doing, you know, their telehealth day, and they are wearing their white lab coat, and it is a great moment to learn.

So I do not know if this analogy will fly, but I think this is in a way like Google where they have both search and really interesting insights and intent, but then also YouTube where you get a lot of time and a lot of attention And I think we brought those 2 together here. I actually think the AI product will help us sell more of our existing products. Because we have a lot of time and attention, and now we know how better to be more relevant.

Perry Scott Gold: Hey, Ryan. it is Perry. I will just jump in on the pricing question. So I would say high level, we are not changing our pricing model for positioning to compete on costs. The brands that know our ROI best are generally not so keen for discounts. I can say looking back 3 years ago to kind of the last cycle, these low cost experiments usually underperform on engagement. And, eventually, there is a flight back to quality cycle that plays out over the sometimes, year, year and a half.

And a lot of times, you will see kind of that money come back away pretty aggressively when some of those kinda lower cost experiments do not really work out quite as well. I will say on the AI search front, a bit of a different pricing paradigm. It looks a little different, and I think even versus who we compete within that space, I think we are attractively priced out of the gate. So I think there is some opportunity there for folks to say, hey. This there is good value here. But I think, you know, we are we are not the banner ad company. We are not a cheaper by the pound company.

So I think overall strategy does not really change on the pricing front.

Analyst (Ryan MacDonald): Appreciate the color. Thanks.

Operator: And our next question comes from the line of Craig Hettenbach with Morgan Stanley.

Analyst (Craig Hettenbach): Yes. Thank you. Jeffrey, on the timeline to monetize DoxGPT, you talked about kind of different medical review. Any parallels to if I think back to the point of care modules, video modules a couple of years ago in terms of what you went through there and what you may expect this go-around?

Jeffrey A. Tangney: I appreciate the long term memory, Craig. And yes, certainly, did think hard and long about that as we thought about our forecast, and it is why we have not put much in the AI bucket. Because even if we you know, sell or contract for a lot of business, we are worried that reviews may take a little while. I will say, as I look at this product, it is actually less new for our pharma clients. Than the vertical video was. it is hard to make vertical videos, especially 3, 4 years ago before we had a lot of AI tools to do it.

And the reality is they just did not have the content So you have to go you know, literally hire an agency and make a video and do a video shoot and clip it together. I mean, that took a fair bit of time and review. I think this time around, it is not about needing new assets. As they call it, you know, new content. it is really just the reviews around the target keywords and the suppression words. So, I think it will be faster this time. But we are taking a conservative approach.

Analyst (Craig Hettenbach): Understood. And then just as my follow-up, you talked about kind of putting the doctors first. You have PureCheck and doing a lot of things to kind of get this product situated What else beyond that, and maybe it is that just relative to some of the other newer entrants in this space, like, what do you think is distinguishing Doximity the most today and then what are you looking to kind of build on to create some separation from new entrants?

Jeffrey A. Tangney: Yeah. Thanks, Greg. You know, the number 1 thing I will highlight is hospitals. At the end of the day, hospitals have a very difficult decision here. They do have some liability with the tools that their doctors use. And what we have seen from our data and usage, it is about half of all of the queries half of all the queries that doctors ask. That have some amount of patient protected information in it. Of course, that is a huge concern for the security departments of these hospitals We have seen a number of them start to lock down and block access to you know, the Wild West of AI that is out there.

So we are really proud that we have, you know, doubled our queries in a couple of months. But I would say I am most proud. It took us 2 full years with our telehealth product. Dialer, and this was during COVID when things were moving very fast. It took us 2 full years to get to a 140 hospital enterprise clients, and we have done that in 2 quarters with our AI product. Which is pretty impressive. And now we have over 250 thousand doctors in the U.S., a lot more than anyone else.

Who have, you know, the full HIPAA permission, HIPAA compliance to put patient data into our tools to help them provide better care, ask questions, get answers. And I think that is a pretty sizable moat.

Operator: And our next question comes from the line of Richard Close with Canaccord Genuity. Your line is open.

Analyst (Richard Close): Yes. Thanks for the questions. Maybe, Jeffrey, a follow-up on that 140 health systems, hospitals that you just mentioned. Are these generally speaking upsells, they were existing Doximity clients. Yeah, Richard.

Jeffrey A. Tangney: They mostly are who were existing clients. I think we have had a couple, you know, new clients. Who were previously clients who came in. But we have 7 of the top 20 hospitals in The U. S. And again, we are we will have more next quarter to talk about. They all have AI steering committees and reviews. So I will say that the process to get going here is not just us you know, adding a paragraph to a contract that already exists. It actually is a fairly exhaustive review process because let's face it. People should be worried about their AI security and AI chaos. Especially, again, when you are dealing with a lot of patient information.

So each of these has been a full process, but again, we are at 1 and 40 now. We continue to grow And we are proud now to also move beyond just working with the biggest health systems, but Aledade, as we called out in our upfront script, they are the largest network of independent primary care practices in the country. We are excited to work with Farzad and his team to make agentic AI for their teams using our scribe and other tools So I think we have got a nice win here where our AI is helping us win in the small practice in addition to the big health systems.

Analyst (Richard Close): Okay. that is helpful. And then, Perry, maybe on the shorter-duration comments, it seems that is a theme with some others that have reported. But what do you think has to happen or occur for pharma to, you know, move beyond the uncertainty? You know, what are they waiting for to get more comfortable with either the pricing or policy environments?

Perry Scott Gold: Hey, Richard. it is a great question. I think the reality is it is coming from the C-suite now, and the risk appetite is not terribly high right now. And I think for better or worse, the policy and macro environment has to get a little bit better. for there maybe to be a little bit more willingness to commit more money upfront for longer. I think eventually, some of these folks realize they are missing out on better economic by not doing that. So I do think it is going to take a little time for macro policy to get better. Hopefully, we will have some kind of settlement to this war in Iran at some point.

I do not know if after the midterm elections, there is a little bit less noise around pharma policy. You know, that is not you know, our specialty to call anything. But I really think that is what has to happen. The other piece, maybe it is you know, showing you know, getting people comfortable with our new product AI search. And eventually, you know, the nice thing about what we have now in the early days, and it is still very early, there is a ton of competition we are seeing amongst brands and amongst sales which is really nice to see there is some level of selling these categories and competitive blunting.

And so there are some brands that want to kind of own a certain category and a lot of times for the entire year, I think, is actually what is what they are gonna wanna go for. So I think the ability to block out some competition specifically through this product and selling through share of voice, is 1 of those things that we think get some folks to commit to longer-term—sorry, 3-month—contracts. That may not happen until the next upfront cycle. I do think there is a component of the competitive blunting that folks may want to leverage for longer term contracts.

Operator: Our next question comes from the line of Ryan Halstead with RBC Capital Markets. Your line is open.

Analyst (Ryan Halstead): Good afternoon. Thanks for taking the question. Maybe just to dig into the bookings. Disclosures, Last quarter, you mentioned starting the year off at, you know, record bookings pace. Just curious to hear, you know, how that translated into billable revenue. Then, obviously, you are guiding to a much slower pace of bookings growth? So just curious kind of how all that has transpired.

Perry Scott Gold: Hey, Ryan. it is a great question. I think what I will come back to is you know, was record bookings growth for January, but January is I think, the smallest month, bookings wise the entire year. And some of that was simply, you know, delayed bookings things that should have signed by 12:31 that got pushed a little bit. So I think as, you know, we went on to the future months, you know, the market has remained soft. that is the reality. I think there is a lot of uncertainty, a lot of want for optionality.

And so we have not, you know, it is been a little bit incrementally worse than 90 days ago. that is the reality. We did not have a war in Iran 90 days ago. So I think that is maybe the disconnect between, you know, strength in January, which was some of it was bookings from the prior year, and not seeing that flow through, so far this year. that is kind of the biggest factor.

Analyst (Ryan Halstead): Okay. that is helpful. And then my question, just on the upsell and, you know, the commentary around the shorter term spend commitments, just looking for some clarification. So you know, typically, my understanding of the upsell period is, you know, you are talking about the reallocation of dollars over the remainder of the budget calendar year or, you know, fiscal year, So how should we think about kind of that shorter term spend commitment impacting that portion of those upsell dollars? Does that mean like some of that upsell dollars could be allocated beyond the budget year?

Jeffrey A. Tangney: Sure. This is, Jeffrey I will I will take this. So listen, if we go back 5 years, I think most of what we sold were annual programs that they would layer on more to in the midyear. Right? that is how things work. We are in a environment right now where there is just a lot of change, You know, the AI news cycle, everything, it is it is moving at a very rapid pace. So the bad news is that does hurt our visibility when clients prefer to sign 3- and 6-month sort of commitments. The good news is we do it at higher prices. And, actually, we are quite explicit about that.

So the year long contracts I mean, they get, you know, decent discounts. For those upfront commitments, and, clients understand that if they make shorter commitments, they pay higher prices. So, the long run, it could work out to be better for us we are getting, you know, better prices. Again, still with a great ROI for our clients. They are making, you know, shorter commitments, but we are getting better pricing. So I do think there is a larger shift here as Perry has Folks are just a little more tepid, and the world is changing.

You know, pretty quickly, and so there is a few of the top 20 clients who, have preferred to move away from the traditional annual commitments for their whole budget and for shorter commitments But again, in the long run, that could turn out to be good for us. From an overall revenue and profit perspective. It does mean, however, that we have less visibility, and that comes out obviously in the guidance that we are providing.

Operator: And our next question comes from the line of Steven Valiquette with Mizuho Securities. Your line is open.

Analyst (Steven Valiquette): Thanks. Yes, good afternoon. Thanks for taking the question. Guess also for us, you know, talking continuing on this dialogue around the revenue outlook for digital spend over the next year or so. Just curious if you are able to maybe give a little more color as to whether or not certain therapeutic categories are worth calling out where you may see incremental or continue to softness in marketing spend? And I asked because another public company talked about softness related to marketing spend and vaccines and also, like, GLP ones. Really do, you know, weight loss and or diabetes.

Just curious if you are seeing those same trends or maybe it is it is more broad based, but just hoping for more color. Thanks.

Jeffrey A. Tangney: Sure. This is Jeffrey. Yeah. We do not talk about individual clients. I will say that mean, our GLP 1 business is growing very nicely, as you would expect, right, that overall business is very competitive and certainly a world where there is increased marketing spend, and it is growing very nicely. In terms of, you know, number of new you know, FDA approvals and whatnot, you know, it is it is a good year. Not a great year, but it is been a good year and we think it will continue to be a good year in other classes as well.

And, again, that is where we see a high percentage of the spend going toward health care professionals as opposed to DTC. And so I think we will continue to do well there. But, yeah, I will say there is clearly a few companies that are, you know, doing very well and we are doing very well with those companies. So it is funny. The overall, you know, iShares Pharma ETF, it is basically flat. Year to date.

Calendar year to date, but you are seeing, I think, more divergence if you will, in which companies are doing well and which are not. that is always been the case, but I think a little more so now than perhaps it has been in a while. But again, on our book of business, we are seeing ourselves growing with the ones who are doing well and growing a little less with the ones who are not. So I think you can just, you know, index us to the overall pharma growth.

Analyst (Steven Valiquette): Okay. that is helpful. Thank you.

Operator: Our next question comes from the line of David Roman with Goldman Sachs.

Analyst (David Roman): Thank you. Good afternoon, everybody. I wanted to start on just some of the market dynamics here. I think you have historically talked about digital HCP Pharma advertising market being in $2.5 billion to $3 billion range. You have offered some perspective on the growth outlook here. But on the paid AI search side, appreciating it is a huge TAM you are going after, but is there any frame of reference you can give us on sort of size of that category today? What do think serviceable addressable market is, and how much of the outlook is dependent on market creation versus shifting dollars over to, to this type of spend?

Jeffrey A. Tangney: Yeah, David. This is Jeffrey. I gotta be honest. This is a hard question to answer because this is genuinely a brand new market. And highlight that with a stat. The average Google search is 2.5 words. Our average, 23 words. it is just a lot more context. it is it is really a very different approach. So even if you were able to identify who was an HCP, you know, on a paid search site, which frankly you mostly cannot, the amount of specificity around the question and the amount of insight really is at a whole new level.

So it is it is a new TAM, and I think it may end up being like what Google did to the Yellow Pages. Right? The Yellow Pages was not that big a business or at least it was a few billion, and then very quickly Google, you know, 10xed that business. I think that as we look at AI search, for medicine, we could end up creating a much bigger TAM than what currently exists in HCP paid search, even if we could clearly identify what percent is HCP paid search. So, hard question to answer, but I will say this. The level of engagement from top pharmaceutical companies kinda off the charts.

The reality is this is something that is very exciting to see and understand what are the real gaps, what are the real issues that, you know, frontline clinicians are encountering with my product And that, I think, will be good for health care overall. Because I think we will start to see better drug development and better education and really start to I think, get through all the layers to understand what the key issues and questions are. Hard to put a number on that right now.

Analyst (David Roman): Understood. And maybe just a follow-up. As you think about appreciating your comments on the macro environment and some of the political and other uncertainty that have faced pharma companies. Coming out of Q1, most companies were raising their revenue outlets for the year. You are seeing your net revenue retention come down a little sequentially quarter over quarter. At what point do you ask yourselves or how do you reassure investors that pharma companies are not figuring out how to do more with less? And the businesses are doing fine without deploying a lot of resources toward HCP advertising. So this is gonna be constrained for a longer period of time until they figure out the next area.

In which to invest.

Jeffrey A. Tangney: Yeah. Thanks, David. This is Jeffrey. I will take that. I think pharma companies will do more with less, but we are the more. Today, they spend a lot on a lot of the mechanics and analytics and you know, data warehouses, you know, 1 KOL interview that 1 of the analysts did, a couple of years ago asked what the fastest growing area in digital ATP was, and the answer was you know, spending on consulting firms, right, because of all of the consulting that needed to be done. Measure the ROI of the programs. And so this allows them to really put you know, money where it works for them, which is where the ROI is.

And, again, I think we have always won on that front, and we continue to grow there. So I think there will be efficiency gains, and that will accrue to us. Because, again, we are the ones who are delivering the ROI.

Operator: And our next question comes from the line of Scott Schoenhaus with KeyBanc. Your line is open.

Analyst (Scott Schoenhaus): Jey, team. Thanks for taking my question. Perry, this 1's for you. You cited market growth at 5% or below and sort of same expectations for your own growth. I mean, maybe what is the delta between your historic, you know, 2x market share versus in line market share? Is it more heavily weighted towards maybe a loss of market share on the AI side and a catch up there? Or this, you know, downshift in temporary you know, lower cost spend from your clients?

Perry Scott Gold: Hey, Scott. it is a great question. And, yes, you know, I think historically, we have always outgrown the market. Some years more so than others. You know, this year, if you look at our guide, we are looking like at least at this point, we will be more in line with the market, maybe slight outperformance. I think the reality is, and you are talking about this earlier, there is a lot of incremental budget, and we saw this 3 years ago. We did not have really something very innovative in the AI search kind of commercial department to offer folks until 2 weeks ago. We were not there in the upfront cycle to provide this.

Now we have something. Playing a little bit of catch up on the commercial front. We are really excited about what we have to offer. So that, I think, will help us, but the reality is and to Jeffrey's point earlier, because of the med legal review timeline, right, you lose the summer for most of these programs going live. And so you have real revenue coming from them in the third quarter, the fiscal third quarter, So October through December, maybe a little bit before. But you are losing out on most of the calendar year having an having kind innovative product in market when you are recognizing revenue. Right?

So that is part of why it is a little harder to outgrow this year. The other piece to your point on the kind of the want for maybe some discounts, some lower cost engagements or impressions. that is just not where we play. And I think 3 years ago, we went through something similar. Think there were some legacy publishers offering discounts at that time. Maybe we lost a little bit of share of the margin. But longer term, we are in a way better position by sticking to kind of what we do best, a premium position first offering that is the strategy that has paid off over the long term. We have been around for 16 years.

We have been through multiple technology cycles. We might be a little late initially on the commercial front, but in the long run, we have the much better product the much better physician uptake, the premium offering, and we eventually kind of have the better share gains. I think longer term, we are very well positioned to continue to outgrow the market. Our engagement's never grown faster. You know, we I think over time, the revenue eventually followed that engagement growth trajectory. And I think when folks are ready to come back to the premium high ROI channels, we will be there in force.

I will also just add, I think Alan put out a survey. he is been doing it for a few years. And when folks were asked pharma brands were asked, who is who is the, you know, who is the platform where you are going to give your money when, you know, if and when you have incremental budget And we were by far the leader there. We had the biggest jump I think we have ever had. Clearly, if people get money, they want to spend with us. So I think we are well positioned if and when some budget unlocks, hopefully, a little bit more this year.

Analyst: Scott, I will just jump in really quickly too, and this is from a total newcomers' and I am not your full time quite yet. But the you know, I think, by being an operator in platform companies,, by having invested in platform Like, I have been really impressed with how the team's been super disciplined. On focusing on the physicians' first kind of engagement side of the market and creating that because that ultimately is what will create the longer term growth opportunity. And I think now it is time to invest as well in the pharma client experience. Around that much stronger engagement.

But you do not really see your base of users all that often go through dramatic acceleration points. And Doximity is seeing that right now. You know, really driven by the AI engagement. So I think that is just a really exciting kind of longer term framing opportunity to think about you know, how AI monetization really starts to play into the model.

Operator: And ladies and gentlemen, that concludes our question and answer session. I will now turn the conference back over to Mr. Jeffrey A. Tangney for closing remarks.

Jeffrey A. Tangney: Oh, I would like to just thank the entire Doximity team for their hard work in serving more doctors every day than ever. Thank you, everyone, for joining.

Operator: Ladies and gentlemen, this concludes today's call, and we thank you for participation. You may now disconnect.