Doximity Reports Q1 Revenue of $157 Million, Raises Full-Year Guidance

Doximity (NYSE: DOCS ) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Doximity reported Q1 2027 revenue of $157 million, a 7% year-over-year increase, with an adjusted EBITDA of $75 million at a 48% margin, surpassing guidance. The company is heavily investing in AI, launching successful products like Doximity Ask, which led in a recent independent clinical AI study, demonstrating lower error rates and higher safety ratings. Doximity signed 165 health system AI clients, including top hospitals, and is seeing significant usage growth, with AI tools being used by nearly half of their active prescribers.

AI Search monetization is gaining traction, contributing to an upwardly revised full-year revenue guidance of $671 to $681 million, representing 5% growth. Management discussed the strategic importance of AI and its potential to unlock new budget opportunities within pharma and hospital clients, emphasizing a shift towards enterprise-level decisions in AI adoption. Full Transcript Abby, Operator Ladies and gentlemen, thank you for standing by. My name is Abby and I will be your conference operator today.

At this time, I would like to welcome everyone to the Doximity first quarter 2027 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question, press star one a second time. Thank you. And I would now like to turn the conference over to Perry Gold, Senior Vice President, Investor Relations. You may begin.

Perry Gold, Senior Vice President, Investor Relations Thank you, Operator. Hello and welcome to Doximity's fiscal 2027 first quarter earnings call. With me on the call today are Jeff Tangney, Co-founder and CEO of Doximity, and Matt Sonefeldt, CFO. 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, and 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-K and any subsequent Form 10-Qs and other reports and filings with the SEC that may be filed from time to time, including our upcoming filing on Form 10-Q. Our forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, August 6, 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 our 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 one-time in nature and 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 Co-founder, Jeff Tangney. Jeff. Jeff Tangney, CEO & Co-founder Thanks, Perry, and thanks everyone for joining our first quarter earnings call. Today I'll cover four things: our financials, AI study results, usage growth, and commercial AI progress.

First, our financials: revenue growth reaccelerated to $157 million in Q1, up 7% year on year. Adjusted EBITDA was $75 million, or a margin of 48%. These were both beats of 3% and 8% versus the high end of our guidance. As you'll hear again shortly from our CFO, Matt, this is our AI investment year.

We're proving you can still post best-in-class software margins while investing heavily in clinical AI. We're leaning in as we see a once-in-a-generation opportunity to build the new AI age of medicine. To that end, I'm proud to report that we're seeing record AI usage while topping the first large-scale independent head-to-head trial of clinical AI vendors. A few weeks ago a team of 57 researchers led by 29 physicians from Stanford and Harvard published No Harm, the first ever independent study of 24 clinical AI models and how they perform in 1,100 real-world patient cases.

It's the kind of rigorous, independent, physician-led research that we need more of. " Clinical AI is rapidly improving. 6% error rate. We believe our outperformance is due mainly to two things: one, our unique built-in drug reference—a model within the model—which is 100% expert-verified to ensure accurate drug doses and interactions; and two, our over 12,000 physician peer-check editors who are continuously reviewing and refining our AI outputs.

These safeguards and quality checks are critical for hospital AI steering committees who can be held liable for their outputs and therefore care deeply about their accuracy. We continue to lead the way in the enterprise, now with 165 signed health system AI clients, including eight of the nation's top honor roll hospitals. Our recent wins include Northwestern, Penn Medicine, and the University of Michigan. As this market migrates from AI Wild West to privacy and risk management, we're well positioned to win as we did in telehealth.

Okay, now to our usage growth: quarterly active workflow prescribers grew more than 30% year on year to record highs, with nearly half using our AI tools in Q1. AI prompt volume was up more than 25% quarter on quarter, while our AI Scribe note-taking users grew a whopping 10x this July over prior. With these gains, we believe we're now the only clinical AI company who is top three in both the AI Search and Scribe markets. Finally, our commercial AI products: our AI Search monetization is off to a strong start, and the higher-level conversations it's generating with clients are fueling new business across our broader pharma portfolio.

New Search contracts are driving our revenue raise for the year, and we're just getting started. Fifteen years ago we carved out a niche as the leading online resume book for physicians. We've grown a lot since then by keeping clinicians first and adapting the latest tech to their needs. Today we believe we're the number one most used clinical service, and in at least five categories: Networking, News, Scheduling, Fax, and Telehealth.

We're the doctors' digital platform, and AI is just the next chapter in our growth. As always, I'd like to end by thanking my Doximity teammates who continue to work incredibly hard to care for those who care for us. With that, I'll hand it over to our CFO, Matt Sonefeldt, to walk through our financials and guidance. Matt Sonefeldt, CFO Thanks, Jeff.

Q1 '27 was a strong quarter for Doximity with robust revenue growth and clinicians adopting our AI suite faster than anticipated. Higher-than-expected AI usage creates a good problem for Doximity, and we will expand our AI investment in fiscal '27 to capture the significant long-term opportunity ahead. Turning to our top line, Q1 '27 revenue of $157 million outperformed the high end of our guidance, with growth improving to 7% year over year. Revenue growth rebounded with solid performance across both pharma and hospital customers.

Continued strong demand from large customers highlights our growing opportunity to work with pharma and hospital CxOs. Our largest customers continue to drive our growth. We now have 127 pharma and hospital customers who generate more than $500,000 in annual subscription revenue on a trailing 12-month basis, representing 7% growth year over year. They contributed 83% of total revenue, a level consistent with prior quarters.

The top 20 customers produced net revenue retention, or NRR, of 112%, with overall NRR at 107% in Q1 on a trailing 12-month basis. Q1 outperformance was driven by two factors specific to pharma customers. First, our new AI Search product drove higher overall client engagement. As a reminder, we launched AI Search in late April, leading to an increased velocity of pharma customer interactions.

These conversations supported overall demand even as we did not recognize any AI revenue in Q1. We have onboarded our first cohort of AI Search customers across more than two dozen programs. We're also building a healthy pipeline for the remainder of FY '27 and beyond. With robust demand for our trusted brand and rigorously verified NPI-level engagement, we expect the majority of AI Search revenue contracted to date to be recognized during Q3.

The second factor was unlocking additional budget from several customers that only committed to shorter-term buys during last year's upfront. For example, we saw a meaningful rebound in spend from one of our large top-20 pharma customers that spent less than Q3 of last year. While the overall pharma spending environment remains tight, we're starting to win innovation budgets with the launch of AI Search. Turning to profitability, adjusted EBITDA in Q1 '27 was $75 million, representing a 48% margin.

The flow-through of incremental revenue growth drove the Q1 outperformance versus our outlook. In Q1, non-GAAP gross margin was 88% versus 91% last year. We increased AI compute spend during the quarter to support higher-than-expected clinician AI usage. We expect to maintain this trend throughout fiscal '27 as we double down on AI investment to further scale Ask engagement during Q1.

We also saw higher costs in our other OPEX lines driven by annual merit increases, greater internal AI usage, and brand marketing. On a GAAP basis, stock-based compensation, or SBC, was $37 million in the quarter, or 23% of revenue. This is consistent with the low-20% SBC guidance provided last quarter. As a reminder, this year's SBC increase is primarily related to the fiscal '26 grant made to our AI-focused R&D team.

Excluding the grant, SBC would have been approximately 19% of revenue in Q1. We also saw a small impact from the hiring of new executives. Our GAAP effective tax rate was approximately 40% in the first quarter compared to 17% in the prior year, driven by the tax treatment of equity compensation. Our non-GAAP effective tax rate remained at 21%.

29 per share. In Q1, fully diluted shares declined by 10 million year over year, or 5%, to 191 million shares outstanding. Our balance sheet and cash flow generation remain strong and create a solid foundation for our growth and AI investment. We ended Q1 '27 with $688 million in cash, cash equivalents, and marketable securities, and we remain debt free.

In Q1 we generated free cash flow of $40 million. The decrease versus the prior year was driven by normal fluctuations in collections, which have variability based on program and delivery timing. We expect collections to normalize throughout the remainder of the year. During the first quarter, we repurchased $92 million worth of shares.

We believe share repurchases remain an attractive, opportunistic use of capital. As of June 30, we had approximately $400 million remaining in our existing repurchase program. Let's turn to our outlook. For Q2 '27 revenue, we expect a range of $170 to $171 million, representing a midpoint of 1% year over year.

For the full year, we have revised our guidance range up by $6 million to between $671 and $681 million, representing 5% growth at the midpoint. This increase represents the flow-through from Q1 outperformance plus a modest incremental raise. The stronger fiscal '27 outlook reflects a more stable pharma budget environment, a higher velocity of customer interactions, and the nascent but growing AI commercial pipeline. Our Q2 '27 growth outlook is impacted by the tough comparison against last year's elevated 23% growth.

In addition, we expect only modest revenue from AI Search from Q2. In Q3 '27, we expect stronger year-over-year growth as AI Search revenue builds. We have a more normal growth comparison to the prior year. To date, we've taken a deliberate approach to scaling AI Search by protecting the Ask user experience while iterating on the product based on customer feedback.

At launch, AI Search programs had conservative inventory caps with shorter three- to four-month commitments. As we move into the upfront, the focus shifts towards larger, longer customer contracts with greater inventory available across more therapeutic categories. 5 million, representing a 48% adjusted EBITDA margin at the midpoint. For fiscal '27, we now expect a revised range of $309 to $329 million, representing a 47% adjusted EBITDA margin at the midpoint.

This continues to be our AI investment year as we respond to stronger-than-expected clinician usage and our growing commercial AI pipeline. This is the right long-term decision for our members and our business. S. hospitals.

Approximately 90% of AI expenses will focus on responding to increased demand for our clinical AI suite. This will be recognized in cost of revenue, and we expect gross margins to trend in the mid- to high-80% range throughout the year. In summary, we're leaning in from a position of strength during one of the most important technology shifts in medical history. S.

clinicians. We believe this puts us one big step closer to realizing our mission to help doctors be more productive so they can provide better care for their patients. Lastly, this quarter we've begun to include a modeling considerations appendix where you can see more detailed financial commentary. With that, I will turn it over to the operator for questions.

Abby, 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 Star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, press Star one a second time. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your questions.

To be able to take as many questions as possible, we ask that you please limit yourself to one question and one follow-up. Again, it is Star one to join the queue, and our first question comes from the line of Bryan Peterson with Raymond James. Your line is open. Bryan Peterson, Analyst at Raymond James Thanks for taking the question, and congrats on the quarter.

Jeff, I wanted to start on the No Harm study that got released a few weeks ago. I know you mentioned that in prepared remarks. What do you think that means from a competitive perspective, and how do you ultimately think that you can influence trust and usage for physicians on the platform? Jeff Tangney, CEO & Co-founder Hi Brian, thanks for the question.

So first I'll just say we're really pleased with the team's efforts. It's really a testament to the hard work of our 800-person team here that they've really leaned into our Pathway acquisition of almost exactly one year ago, built a unique built-in drug reference, which is really key to answering clinical questions well, and then brought on board 12,000 cited authors, physician peer-check editors who are continuously reviewing and improving our AI outputs. There's actually been a couple studies that have been published now. One was done by NYU and published in Nature, and then the Stanford/Harvard study, the No Harm Study.

Really groundbreaking studies that are important for clinical AI because at the end of the day, we're treating lots and lots of people, hundreds of millions of people, with AI these days, and we want to make sure that they're getting the most accurate, safest answers. And so the No Harm study was the first all-model comparison done sort of on a secret-shopper basis, you know, where they went out and asked questions without the models knowing. Truly independent, 1,100 real-world patient cases that they had seen at Stanford. And then they went and they graded each of those answers in a consistent format.

And again, we're very pleased to have come out on top of that overall approach. And I'll just say it's the kind of rigorous, independent, physician-led research that we need much more of. And I hope that folks keep doing it because competition is good for the patient. It's how we all get better.

And we are certainly in favor of honest competition here to have the best results, the best answers. I'll say where I think this really plays out in the marketplace is with hospitals.