Financial Data and Key Metrics Changes - The company reported revenue of $169 million for Q2 2026, representing a 23% year-on-year growth and a 7% beat from the high end of guidance [6][11] - Adjusted EBITDA margin was 60%, amounting to $101 million, which was 15% above the high end of guidance [6][12] - Free cash flow increased by 37% year-on-year to $91.6 million [13] - Non-GAAP gross margin remained flat at 92% compared to the prior year [12] Business Line Data and Key Metrics Changes - The number of unique prescribers using workflow tools reached over 650,000, marking an all-time high [7] - AI tools saw a growth of over 50% in quarterly active prescribers from the previous quarter [7] - Integrated programs accounted for over 40% of bookings in Q2, a significant increase from less than 5% in the same quarter last year [15][39] Market Data and Key Metrics Changes - The company finished the quarter with a net revenue retention rate of 118% on a trailing 12-month basis [11] - The small-medium business segment saw a growth of approximately 100% year-on-year [45] Company Strategy and Development Direction - The company is focusing on AI-optimized integrated programs, which are expected to enhance client engagement and revenue predictability [16][39] - The integration of Pathway's medical data set and AI models into Docs GPT is seen as a significant advancement in medical AI [8][9] - The company aims to maintain a 55%+ adjusted EBITDA margin while investing in AI solutions [17] Management's Comments on Operating Environment and Future Outlook - Management expressed some uncertainty regarding the 2026 budget discussions, indicating a cautious approach to revenue expectations [20][21] - Despite potential headwinds, management remains optimistic about client engagement and the growth of integrated programs [21][36] - The company expects revenue for Q3 2026 to be in the range of $180 million to $181 million, reflecting a 7% growth at the midpoint [14] Other Important Information - The company repurchased $21.9 million worth of shares during Q2, with $280 million remaining in the repurchase program [13] - The company has integrated a drug reference feature in Docs GPT, providing peer-reviewed answers to drug-related questions [8][62] Q&A Session Summary Question: Uncertainty around budget discussions - Management indicated that the uncertainty primarily relates to the 2026 budgets, which are expected to be finalized soon [20] Question: Future AI opportunities - Management expressed excitement about the potential for AI to add significant value for physicians and plans to continue investing in this area [22][23] Question: Changes in client budgeting allocations - Management noted that discussions with clients indicate some changes in budget allocations, particularly in light of recent policy changes [28][30] Question: Impact of direct-to-consumer advertising policies - Management acknowledged that it is early to assess the impact of new policies on direct-to-consumer advertising but sees potential opportunities [30] Question: Budget flush expectations - Management explained that the transition to integrated programs has led to a more even distribution of upsell dollars throughout the year, impacting budget flush dynamics [34][35] Question: AI strategy and revenue contribution - Management highlighted that AI-optimized programs are expected to significantly contribute to revenue growth in the future [39] Question: Market share in clinical reference - Management stated that they do not have a clear measure of market share in clinical reference but are focused on providing accurate, peer-reviewed answers [75][76] Question: Investment in AI tools - Management indicated that they are currently investing in AI tools and expect expenses to plateau as scale efficiencies are realized [82]

Financial Data and Key Metrics Changes - The company reported revenue of $169 million for Q2 2026, representing a 23% year-on-year growth and a 7% beat from the high end of guidance [4][9] - Adjusted EBITDA margin was 60%, amounting to $101 million, which was 15% above the high end of guidance [4][10] - Free cash flow increased by 37% year-on-year to $91.6 million [10] Business Line Data and Key Metrics Changes - The number of unique prescribers using workflow tools reached over 650,000, marking an all-time high [5] - AI tools saw quarterly active prescribers grow by more than 50% from the prior quarter [5] - Integrated programs accounted for over 40% of bookings in Q2, compared to less than 5% in the same quarter last year [12][13] Market Data and Key Metrics Changes - The company finished the quarter with a net revenue retention rate of 118% on a trailing 12-month basis [9] - The number of customers contributing at least $500,000 each in subscription-based revenue increased by roughly 16% year-on-year [9] Company Strategy and Development Direction - The company is focusing on AI-optimized integrated programs, which are expected to provide higher returns for clients and better predictability for the business long-term [15] - The integration of Pathway's medical data set and AI models into Docs GPT is seen as a significant advancement in medical AI [6][7] - The company aims to maintain a 55%+ adjusted EBITDA margin while investing in AI solutions [15] Management's Comments on Operating Environment and Future Outlook - Management expressed some uncertainty regarding the 2026 budget discussions, indicating a cautious approach to revenue expectations [17][18] - Despite potential headwinds, management remains optimistic about client engagement and the performance of integrated programs [18] - The company expects revenue for Q3 2026 to be in the range of $180 million-$181 million, representing a 7% growth at the midpoint [11] Other Important Information - The company repurchased $21.9 million worth of shares during Q2, with $280 million remaining in the existing repurchase program [10] - The company has integrated a drug reference feature into Docs GPT, allowing for quick access to peer-reviewed answers [6][62] Q&A Session Summary Question: Uncertainty around budget discussions - Management indicated that the uncertainty primarily relates to the 2026 budgets, which are expected to be finalized soon, and noted high client engagement with their platform [17][18] Question: Future AI opportunities - Management expressed excitement about the potential for AI to add value for physicians and indicated plans to fully leverage AI capabilities [21] Question: Changes in client budgeting allocations - Management noted that it is too early to determine the impact of recent policy changes on client budgeting but acknowledged ongoing discussions with agency partners [25][28] Question: Impact of Pathway acquisition - Management highlighted the integration of Pathway as a key advancement, particularly in providing accurate drug-related information [57][62] Question: Market share and growth dynamics - Management confirmed that they are pacing ahead of last year in terms of new contract activity and expect to continue growing at a rate above the market average [81][83]