Doximity Q4 Earnings Call Highlights

Key Points

• Q4 revenue beat guidance at $145 million, with full-year fiscal 2026 revenue rising 13% to $645 million. Doximity also delivered record free cash flow of $107 million in the quarter and $317 million for the year.
• The company is entering an “AI investment year” and seeing strong adoption of its AI tools, with nearly half of active prescribers using them and 140 health systems now buying its Clinical AI Suite. Doximity also launched commercial AI Search for pharma clients, though management expects limited near-term revenue from it.
• Near-term outlook is cautious because of softness in the digital pharma advertising market and broader policy/macro uncertainty. Doximity guided fiscal 2027 revenue growth to about 4% at the midpoint, while continuing share buybacks and leadership changes, including a new CFO and president.

Doximity NYSE: DOCS reported fiscal fourth-quarter revenue above the high end of its guidance and said it is entering what management called an “AI investment year,” with higher spending planned for artificial intelligence products even as near-term growth in the digital pharma advertising market remains soft.

Co-founder and CEO Jeff Tangney said revenue for the quarter ended March 31 was $145 million, up 5% year over year. Full-year fiscal 2026 revenue was $645 million, up 13%. The company generated a record $107 million in quarterly free cash flow, its first nine-digit free cash flow quarter, and $317 million for the full year, up 19%.

Adjusted EBITDA margin was 45% in the fourth quarter and 55% for the full year. Perry Gold, Doximity’s vice president of investor relations, said fourth-quarter non-GAAP gross margin declined to 89% from 91% a year earlier, primarily because of AI compute costs.

AI Usage Accelerates Across Physician Platform

Tangney said nearly half of U.S. doctors now work at hospitals that buy Doximity’s workflow or scheduling tools, and that the company is becoming more embedded in electronic health record workflows. Doximity’s benchmark workflow engagement reached more than 800,000 unique quarterly active prescribers in the fourth quarter, up roughly 30% year over year.

Nearly half of those active prescribers used Doximity’s AI tools during the quarter, Tangney said. In the nine months since Doximity acquired Pathway, active users of its AI Search and Scribe tools have tripled. Last month, those users averaged 31 queries each, nearly double the January level.

Tangney also cited a clinical search evaluation completed by 4,700 physician residents, saying respondents chose Doximity’s AI answers over its nearest competitor by a two-to-one margin. He said users preferred the company’s built-in drug reference and peer review.

As of the call, 140 health systems had purchased Doximity’s Clinical AI Suite, including seven of the top 20 hospitals. More than 250,000 prescribers now have access to the suite through what Tangney described as a hospital-approved, HIPAA-compliant workflow.

Company Begins Monetizing AI Search

Doximity said it has launched a commercial AI Search offering aimed at pharma clients’ paid search budgets. Tangney said the company introduced the product at its annual Pharma Client Summit in New York, attended by 40 marketing leaders from major pharmaceutical companies.

“Their response was enthusiastic,” Tangney said, adding that clients were interested in using Doximity’s AI Search surface to reach prescribers while they are researching treatment options. The company has already closed its first few AI Search deals with top 20 pharma manufacturers, but management said it expects minimal AI revenue contribution in the current fiscal year.

Tangney said the company sees AI Search as a multi-billion-dollar addressable market over the long term, separate from the pharma marketing budgets Doximity already serves. However, he emphasized that the market is still nascent and regulated, and that reviews around keywords and suppression terms will take time.

Doximity also announced two product and partnership updates. The company partnered with Aledade to provide value-based care AI agents for its network of primary care organizations. It also added e-prescribing to its platform, with more than 1,000 prescribers participating in beta testing. Tangney said the back end is powered by Photon Health.

Soft Pharma Ad Market Weighs on Outlook

Gold said Doximity is seeing continued softness in short-term demand in the healthcare professional digital pharma advertising market, with limited visibility due to elevated policy uncertainty and macro risk. He said management expects overall market growth to be modest this year, likely at or below 5%.

The company said 65% of its subscription-based revenue guidance is currently booked, in line with its three-year average, but the guidance incorporates more moderate growth than in prior years. Gold said many brands are still making upfront investments, but with shorter planning horizons and more modest growth.

Gold said incremental pharma budgets are generally being directed toward either “innovative new offerings” or lower-cost engagement options. Doximity does not plan to change its pricing model to compete on cost, he said, describing the company as a premium physician-focused offering.

For the first quarter of fiscal 2027, Doximity expects revenue of $151 million to $152 million, representing 4% growth at the midpoint. It expects adjusted EBITDA of $68.5 million to $69.5 million, representing a 46% adjusted EBITDA margin.

For the full fiscal year, the company guided for revenue of $664 million to $676 million, also representing 4% growth at the midpoint. Adjusted EBITDA is expected to range from $323 million to $335 million, implying a 49% adjusted EBITDA margin.

Buybacks, Customer Metrics and Leadership Changes

Doximity ended fiscal 2026 with $749 million in cash equivalents and marketable securities. The company repurchased $91 million of shares in the fourth quarter and $432 million during the full fiscal year, up from $116 million in fiscal 2025. It had $493 million remaining under its repurchase authorization as of March 31.

Customer expansion continued to contribute to growth. Gold said net revenue retention was 109% on a trailing 12-month basis, while the company’s top 20 customers posted net revenue retention of 114%. Doximity ended the quarter with 125 customers contributing at least $500,000 each in subscription-based revenue over the trailing 12 months, up from 118 a year earlier. Those customers represented 83% of total revenue.

Tangney also discussed leadership changes. Anna Bryson stepped down as CFO after medical leave, and Matt Sonefeldt was named the company’s new CFO. Tangney said Sonefeldt has led investor relations, finance and strategy at LinkedIn, Atlassian and DocuSign, and had advised Doximity externally for more than a year. Sonefeldt is expected to join Doximity’s San Francisco office full-time in early June.

Doximity also named Dr. Steve Zatz as president. Tangney said Zatz spent 20 years at WebMD Medscape, including the last seven as president and CEO, and brings long-standing industry relationships.

Management said fiscal 2027 spending will include higher AI compute costs, investments in PeerCheck and increased brand marketing. Gold said stock-based compensation is expected to rise to the low 20s as a percentage of revenue in fiscal 2027 before trending lower starting in 2028, primarily due to the Pathway acquisition and performance-based grants for the growing AI team.

About Doximity NYSE: DOCS

Doximity, trading as DOCS, operates a digital professional network and communications platform designed primarily for clinicians. Headquartered in San Francisco, the company connects physicians, nurse practitioners, physician assistants and other healthcare professionals, providing tools that streamline clinical communication, telehealth delivery and access to specialty-specific medical information. Its platform is positioned as a professional hub where clinicians manage their workflows, stay current with medical news and collaborate securely with peers.

The company’s offerings include secure messaging and video telehealth capabilities that enable clinicians to consult with patients and colleagues while protecting patient information.

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