Doximity, Inc. (DOCS) Earnings

Management highlights

### AI Platform and Product Development - 140 health systems have purchased Doximity's clinical AI suite (including 7 of the top 20 U.S. hospitals), giving over 250,000 prescribers HIPAA-compliant access to the tools within hospital-approved workflows. This enterprise adoption growth outpaced the growth of Doximity's earlier telehealth product, hitting 140 clients in just two quarters. - Benchmark workflow engagement reached over 800,000 unique quarterly active prescribers in Q4, up 30% YoY (a significant acceleration from high single-digit growth a year prior). Nearly half of these active prescribers used Doximity's AI tools in Q4. - Nine months after acquiring Pathway AI, active users for AI search and scribe tools have tripled. Average monthly usage per user hit 31 queries in the most recent month, nearly double January 2026 levels. In a blind head-to-head evaluation with 4,700 physician residents, respondents chose Doximity AI answers over the nearest competitor by a 2:1 margin, citing preference for integrated drug references and physician peer review. - Two new key products launched: 1) A partnership with Allidade to deliver value-based care AI agents for thousands of small independent primary care practices; 2) Beta e-prescribing functionality integrated with telehealth workflows, powered by partner Oton Health, with over 1,000 prescribers already participating. - Doximity's core differentiator against general AI tools is HIPAA compliance for patient-protected data and physician-led accuracy validation, addressing the top physician concern about AI (71% of surveyed physicians cite accuracy as their primary AI concern). ### AI Monetization Strategy - Doximity recently launched commercial AI search for pharma clients at its annual Pharma Client Summit, with 40 top global pharma marketing leaders in attendance. The product targets existing large pharma paid search budgets, reaching prescribers at the exact moment they are researching treatment options, a capability traditional paid search cannot match. - The first few AI search deals with top 20 pharma manufacturers have already closed, but management expects minimal AI revenue contribution in FY2027 as the market is nascent and heavily regulated, with regulatory review delaying revenue recognition. Longer term, management estimates AI search alone represents a multi-billion dollar incremental total addressable market (TAM) beyond Doximity's existing served pharma marketing market. - Near-term investments in AI (R&D, cloud compute, marketing) will weigh on margins, which management views as a worthwhile long-term trade. ### Leadership Updates - Former CFO Anna Bryson stepped down after medical leave; Matt Sonnefeld (previously an external advisor to Doximity with 25 years of finance/strategy experience at LinkedIn, Atlassian, and DocuSign) has been named new CFO, joining full-time in San Francisco in early June 2026. - Dr. Steve Zatz (former 7-year CEO of WebMD Medscape with 20 years of industry experience) joined as new President, based in New York, bringing deep existing healthcare industry relationships. ### Capital Return - Doximity repurchased $91 million of shares in Q4 FY2026, bringing total full-year share repurchases to $432 million, up significantly from $116 million in FY2025. As of March 31, 2026, $493 million remained in the authorized repurchase program.

Guidance

- **Q1 FY2027 Guidance**: Revenue expected in the range of $151 to $152 million, representing 4% YoY growth at the midpoint. Adjusted EBITDA expected between $68.5 and $69.5 million, for a 46% adjusted EBITDA margin. - **Full FY2027 Guidance**: Revenue expected between $664 and $676 million, representing 4% YoY growth at the midpoint (a downward revision from historical double-digit outperformance, aligned with expectations for soft overall industry growth). Adjusted EBITDA expected between $323 and $335 million, for a 49% adjusted EBITDA margin. This is maintained above the high 40% margin target even with elevated AI investments. - Stock-based compensation is expected to increase to the low 20% range as a percentage of revenue in FY2027, driven by the Pathway acquisition and performance grants for the growing AI team, before trending back down starting in 2028. Management expects share repurchases will more than offset dilution from new equity awards. - 65% of FY2027 subscription-based revenue guidance is already booked, in line with Doximity's three-year average, with more moderate growth assumptions incorporated than in prior years. Minimal AI revenue contribution is expected in H1 FY2027, with a more notable revenue ramp starting in H2, following required regulatory and client review processes. - Management reaffirmed that Doximity is well-positioned to outgrow the HCP digital marketing market over the long term, supported by accelerating engagement and strong AI product differentiation.

Segment performance

Doximity reports consolidated financial results and does not break out detailed product segment performance with separate absolute and percentage contribution figures in this call. The aggregate consolidated results are as follows: - Q4 FY2026 revenue: $145 million, up 5% year-over-year, exceeding the high end of prior guidance - Full FY2026 revenue: $645 million, up 13% year-over-year - Q4 FY2026 adjusted EBITDA: $66 million, for an adjusted EBITDA margin of 45% (down from 50% YoY, driven by higher AI compute investments) - Full FY2026 adjusted EBITDA: $358 million, for a 55% adjusted EBITDA margin (flat YoY, with 14% YoY adjusted EBITDA growth) - Q4 FY2026 free cash flow: $107 million, up 11% YoY (Doximity's first nine-digit free cash flow quarter) - Full FY2026 free cash flow: $317 million, up 19% YoY, equal to 49% of total revenue - As of Q4 end, Doximity had 125 customers contributing at least $500,000 in annual trailing 12-month subscription revenue (a 6% YoY increase), and these customers accounted for 83% of total company revenue. Trailing 12-month net revenue retention was 109% overall, and 114% for the top 20 customers.

Risks & headwinds

- Short-term demand in the HCP digital pharma ad market remains soft, with limited visibility driven by elevated policy uncertainty and increased macroeconomic risk. Management expects overall market growth to be modest at or below 5% in FY2027, slower than historical averages. - Pharma clients are retaining optionality amid uncertainty, leading to a shift to shorter-duration spending commitments rather than traditional annual upfront contracts, which reduces Doximity's near-term revenue visibility. There is limited incremental budget available in the current market environment. - AI product commercialization requires additional regulatory and medical legal review, which delays revenue recognition and means the contribution from new AI products will be limited in the first half of FY2027. - General AI market competition for physician engagement is intense, with many new entrants investing heavily in the space. While Doximity sees its HIPAA compliance and physician-led accuracy as key differentiators, there is no guarantee the company will capture expected market share in the new AI search market. - Higher AI-related spending (compute, R&D, marketing) will pressure near-term gross and operating margins relative to historical levels. - Geopolitical instability (including the ongoing conflict in the Middle East) has added to macroeconomic uncertainty, further dampening pharma client risk appetite and longer-term spending commitments.

Analyst Q&A

• Q: How large is pharma customer appetite for AI solutions, and what is the 2-3 year size opportunity for Doximity's AI search product? /

  A: Jeff Tangney reported that top 20 pharma marketing leaders are already heavily leaned into AI, with many allocating 10-20% of their total marketing budgets to AI initiatives as part of executive compensation targets. Doximity's product, which is built around physician-first accuracy and integrated clinical data, has received strong early interest. Management estimates the HCP-focused AI search TAM is multi-billion dollars, incremental to Doximity's existing market, based on the overall $19 billion U.S. pharma paid search market, with most of that allocated to consumer rather than professional search.

• Q: What key competitive advantages allow Doximity to stand out from newer AI entrants targeting physicians? /

  A: Jeff Tangney emphasized that Doximity's largest advantage is its enterprise HIPAA-compliant deployment through hospital systems. Half of all physician AI queries contain protected patient health information, and many hospitals are blocking access to unregulated general AI tools over security and liability concerns. Doximity already has 140 health system clients and 250,000 pre-approved HIPAA-compliant prescribers, a position no other AI entrant has achieved, and it is expanding to serve small independent practices in addition to large health systems.

• Q: How has customer buying behavior changed amid current uncertainty, and what is the strategy for AI search pricing relative to existing products? /

  A: Perry Gold confirmed that the main shift is toward shorter-duration contracts, as pharma C-suites retain optionality amid policy and macro uncertainty. Doximity is not changing its core premium pricing model to compete for low-cost banner ad business, which management has seen underperform long-term and eventually see capital flow back to high-ROI premium channels. AI search uses a different pricing paradigm than Doximity's traditional products, and is priced attractively relative to existing competitors in the search space while maintaining Doximity's premium positioning.

• Q: What would need to change for pharma clients to return to longer-term upfront spending commitments? /

  A: Perry Gold noted that pharma risk appetite is currently depressed from the C-suite level, and improvement will require reduced policy and macro uncertainty, including potential clarity after U.S. midterm elections and resolution of geopolitical conflicts. Over time, competitive dynamics are expected to drive longer commitments: many brands want to own share of voice for specific therapeutic categories, which will likely lead to longer contract terms once AI search offerings are fully reviewed and operational.