Core Insights - Doximity, Inc. reported adjusted earnings per share (EPS) of 46 cents for Q3 fiscal 2026, a 2.2% increase year over year, exceeding the Zacks Consensus Estimate by 4.5% [2] - The company's revenues for the quarter reached $185.1 million, marking a 10% year-over-year growth and surpassing the Zacks Consensus Estimate by 2.3% [3] Financial Performance - Subscription revenues amounted to $175.4 million, up 8.1% year over year, driven by a 112% net revenue retention rate and growth in large accounts [4] - Other revenues increased significantly by 52.6% year over year to $9.7 million [4] - Gross profit rose 7.7% year over year to $166.4 million, but gross margin contracted by 170 basis points to 89.9% [5] - Operating profit totaled $71.9 million, reflecting a 10% decline from the prior year, with operating margin contracting 855 basis points to 38.9% [6] Cash Position - Doximity ended Q3 fiscal 2026 with cash and cash equivalents of $64.8 million, down from $169.2 million at the end of Q2 [7] - Cumulative net cash provided by operating activities was $216.9 million, compared to $174.8 million a year ago [7] Guidance - For Q4 fiscal 2026, Doximity expects revenues between $143 million and $144 million, below the Zacks Consensus Estimate of $149.8 million [10] - The full fiscal year revenue outlook has been narrowed to between $642.5 million and $643.5 million, compared to the previous range of $640 million to $646 million, also below the consensus estimate of $645.3 million [10] Growth Drivers - Doximity experienced strong platform momentum with 3 million registered members, reaching over 85% of U.S. physicians [12] - Engagement metrics showed record highs, with significant increases in active users and workflow solutions [13] - AI adoption was a key growth driver, with over 300,000 prescribers using Doximity's AI tools during the quarter [14]

Financial Data and Key Metrics Changes - The company reported Q3 revenue of $185 million, reflecting a 10% year-on-year growth and a 2% beat from the high end of guidance [6][14] - Adjusted EBITDA margin for Q3 was 60%, amounting to $111 million, which was 7% above the high end of guidance [7][14] - The net revenue retention rate was 112% on a trailing twelve-month basis, with the top 20 customers showing a higher retention rate of 117% [13][14] - Free cash flow generated in Q3 was $58.5 million, with cash, cash equivalents, and marketable securities totaling $735 million at the end of the quarter [15] Business Line Data and Key Metrics Changes - The company surpassed 3 million registered members, with over 85% of US physicians and two-thirds of NPs and PAs on the platform [7] - Unique active users for workflow tools reached a record 720,000 in Q3, marking the largest sequential gain ever [7] - Over 300,000 unique prescribers utilized AI products in Q3, with DocsGPT users querying the service an average of 4 times a week [9] Market Data and Key Metrics Changes - The company expects the healthcare and pharma digital advertising market to grow roughly 5% in calendar 2026, down from previous expectations [22] - The uncertainty surrounding Most Favored Nation (MFN) agreements impacted client budget deployments, leading to delays in signing deals [25][37] Company Strategy and Development Direction - The company aims to strengthen its AI-powered digital platform for doctors, focusing on building trust through its Peer Check program [12] - The strategy includes investing in AI infrastructure and development while maintaining a floor of 50% adjusted EBITDA margins [19][41] - The company plans to commercialize AI tools later in the year, tapping into clients' innovation and upsell budgets [19][40] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment remains challenging due to policy headwinds and client uncertainty regarding budget allocations [17][25] - Despite a slower start to the year, management expressed optimism about ending calendar year 2026 with significantly better growth [19][46] - The company is positioned to capture the AI opportunity, with a focus on building trusted relationships with healthcare providers [66] Other Important Information - The company repurchased $196.8 million worth of shares during Q3 and has a new $500 million open-ended repurchase authorization [15] - The company has not yet included revenue from AI tools in its current guidance, as these products have not been commercialized [12][19] Q&A Session Questions and Answers Question: What is the expected market growth rate for calendar year 2026? - The company expects the market to grow roughly 5% in calendar 2026, influenced by recent policy changes and MFN agreements [22][25] Question: How does the company view the AI monetization opportunity? - The company sees a large opportunity in paid search and plans to tap into this market later in the year with commercial AI products [53] Question: What is the impact of policy uncertainty on pharma customers? - Many top 20 pharma customers faced delays in budget approvals due to policy uncertainty, but there is intent to deploy funds later in the year [37][63] Question: How is the company addressing talent retention in a competitive environment? - The company is focused on retaining talent by offering stock grants and fostering a mission-driven culture [71]

Financial Data and Key Metrics Changes - The company reported Q3 revenue of $185 million, reflecting a 10% year-on-year growth and a 2% beat from the high end of guidance [6][14] - Adjusted EBITDA margin for Q3 was 60%, amounting to $111 million, which was 7% above the high end of guidance [7][14] - The net revenue retention rate was 112% on a trailing twelve-month basis, with the top 20 customers showing a higher retention rate of 117% [13][14] Business Line Data and Key Metrics Changes - The company surpassed 3 million registered members, with over 85% of US physicians and two-thirds of NPs and PAs on the platform [7] - Unique active users for workflow tools reached a record 720,000 in Q3, marking the largest sequential gain ever [7][8] - Over 300,000 unique prescribers utilized the company's AI products in Q3, with active prescribers querying the AI tool an average of 4 times a week [9][10] Market Data and Key Metrics Changes - The company expects the healthcare and pharma digital advertising market to grow roughly 5% in calendar 2026, down from previous growth rates [22][23] - The uncertainty surrounding recent policy changes, particularly the most favored nation (MFN) agreements, impacted client budget deployments and deal signings [17][25] Company Strategy and Development Direction - The company aims to strengthen its AI-powered digital platform for doctors, focusing on building trust and ensuring physician oversight in AI applications [12][19] - The strategy includes significant investments in AI infrastructure and development, with expectations to maintain adjusted EBITDA margins of 50% or greater [19][41] - The company plans to commercialize its AI tools later in the year, tapping into clients' innovation and upsell budgets [19][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about ending calendar year 2026 with significantly better growth than the start, driven by the release of previously unreleased client funds [46] - The company noted that digital marketing performs well in efficiency-driven environments, with a strong ROI for clients [68] - Management acknowledged the competitive landscape in AI and emphasized the importance of trust and relationships with healthcare providers [56][66] Other Important Information - The company generated free cash flow of $58.5 million in Q3 and ended the quarter with $735 million in cash and marketable securities [15] - A new $500 million open-ended share repurchase authorization was approved by the board [15] Q&A Session Summary Question: What is the growth rate expectation for the market in calendar year 2026? - The company expects the market to grow roughly 5% in calendar 2026, influenced by MFN agreements and client budget uncertainties [22][23] Question: How does the company view AI spending and innovation budgets? - The company anticipates that AI spending will ramp up as hospitals and health systems begin to adopt AI tools more broadly [26][27] Question: What is the company's strategy regarding AI monetization? - The company plans to introduce commercial AI products later this year, with expectations for revenue generation in the future [40][52] Question: How is the company addressing talent retention in a competitive environment? - The company is focusing on retaining its mission-driven team and offering stock grants to key personnel [71][72] Question: What are the expectations for the mid-year upsell season? - The company believes that as client funds are released, there will be opportunities for stronger upsell during the mid-year season [36][37]

Financial Data and Key Metrics Changes - The company reported Q3 revenue of $185 million, reflecting a 10% year-on-year growth and a 2% beat from the high end of guidance [4][5] - Adjusted EBITDA margin for Q3 was 60%, amounting to $111 million, which was 7% above the high end of guidance [5][12] - Non-GAAP gross margin for Q3 was 91%, down from 93% in the prior year, attributed to increased AI infrastructure investments [12][13] - Free cash flow generated in Q3 was $58.5 million, with cash, cash equivalents, and marketable securities totaling $735 million at the end of the quarter [13][14] Business Line Data and Key Metrics Changes - The company surpassed 3 million registered members, with over 85% of US physicians and two-thirds of NPs and PAs on the platform [5][6] - Unique active users for workflow tools reached a record 720,000 in Q3, marking the largest sequential gain ever [5][6] - Over 300,000 unique prescribers utilized AI products in Q3, with DocsGPT users querying an average of 4 times a week [8][9] Market Data and Key Metrics Changes - The company expects the healthcare and pharma digital advertising market to grow roughly 5% in calendar 2026 [20][22] - The net revenue retention rate was 112% on a trailing twelve-month basis, with top 20 customers showing a higher retention rate of 117% [12][13] Company Strategy and Development Direction - The company aims to strengthen its AI-powered digital platform for doctors, focusing on building trust through its Peer Check program [10][11] - The strategy includes investing in AI infrastructure and development while maintaining adjusted EBITDA margins of 50% or greater [15][18] - The company plans to commercialize its AI tools later in the year, tapping into clients' innovation and upsell budgets [18][44] Management's Comments on Operating Environment and Future Outlook - Management noted short-term industry-wide policy headwinds affecting client budgets, particularly due to recent policy changes [16][17] - Despite Q3 outperformance, the company anticipates a slower start to calendar 2026 but expects to end the year with significantly better growth [17][50] - The company is optimistic about the release of previously unreleased client funds and strong inbound demand for AI engagement [18][50] Other Important Information - The company repurchased $196.8 million worth of shares during Q3 and has a new $500 million open-ended repurchase authorization [14] - The company has over 10,000 U.S. physician experts reviewing clinical answers, enhancing the trustworthiness of its AI tools [10][11] Q&A Session Summary Question: What is the growth rate for the market in calendar year 2026? - Management expects the market to grow roughly 5% in calendar 2026, with MFN agreements impacting client budget deployments [20][22][25] Question: How does the company view AI monetization opportunities? - The company sees a large opportunity in paid search and plans to enter the market with commercial AI products later this year [58] Question: What is the strategy regarding AI infrastructure costs? - The company acknowledges that there will be costs without associated revenue for a few quarters but believes these investments are worthwhile for future growth [44][45] Question: How is the company addressing talent retention in a competitive environment? - The company is focusing on retaining mission-driven talent and offering stock grants to keep key personnel engaged [76][77] Question: What are the expectations for the mid-year upsell season? - Management believes that as client funds are released, there will be opportunities for stronger upsell during the mid-year season [40][41]

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, reaching $91.6 million [13] Business Line Data and Key Metrics Changes - The company achieved an all-time record number of quarterly active subscribers for its Newsfeed, with double-digit growth in articles read [7] - Over 650,000 unique prescribers used the workflow tools in Q2, marking another all-time high [7] - AI tools saw the fastest growth, with quarterly active prescribers up more than 50% from the prior quarter [7] 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 number of customers contributing at least $500,000 each in subscription-based revenue increased by approximately 16% year-on-year [11] Company Strategy and Development Direction - The company is focusing on AI-optimized integrated programs, which represented over 40% of bookings in Q2, compared to less than 5% in the same quarter last year [15][39] - The integration of Pathway's medical data set and AI models into DoxGPT is expected to enhance the company's offerings in medical AI [8][60] - 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 performance of integrated programs [21] - The company expects revenue for Q3 2026 to be in the range of $180 million to $181 million, representing 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 existing repurchase program [13] - The company is excited about the long-term growth opportunities presented by its AI suite [17] Q&A Session Summary Question: Uncertainty around budget discussions - Management indicated that the uncertainty primarily relates to calendar 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, with plans to continue expanding AI capabilities [22][23] Question: Budget allocation changes - Management noted that clients are considering potential changes in budget allocations, particularly in light of recent policy changes [28][30] Question: Impact of direct-to-consumer advertising - Management acknowledged that while there are discussions around D2C advertising, it is still early to assess the impact on budgets [29][30] Question: Integrated programs and visibility - Management clarified that integrated offerings represented 40% of upsell sales in Q2, which provides better visibility for future revenue [48][49] Question: Market share and growth - Management stated that the company has been growing at about two times the market growth rate, with a strong competitive position [88][89]

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]

Core Insights - The article discusses two telehealth stocks, Hims & Hers Health and Doximity, which have shown significant growth and potential for future returns in the healthcare sector [2]. Hims & Hers Health - Hims & Hers Health has experienced a stock price increase of over 200% in the past 12 months, significantly outperforming the S&P 500, which rose about 18% during the same period [3]. - The company's growth was driven by its ability to offer affordable compounded GLP-1 drugs for weight loss, although it can no longer mass-produce these drugs due to the FDA declaring the shortage resolved [5]. - Hims & Hers is diversifying its offerings beyond weight loss, focusing on sexual health, hair loss, dermatology, mental health, and primary care, with most revenue coming from recurring subscriptions [6]. - The acquisition of Zava, a European digital health platform, is expected to enhance investor confidence and expand Hims & Hers' market reach into the U.K., Ireland, France, and Germany, with plans to launch in Canada in 2026 [7][8]. - The company reported a 110% year-over-year revenue growth in Q1 and generated approximately $50 million in free cash flow [8]. Doximity - Doximity has seen its shares increase by over 100% in the past year, positioning itself as the largest digital platform for U.S. medical professionals [9]. - The platform serves as a professional network for healthcare professionals, offering tools for communication, news, and career management, including telehealth solutions [10]. - Doximity provides free access to its services for healthcare professionals, generating revenue through advertising and selling information to pharmaceutical manufacturers and healthcare systems [11][12]. - In fiscal 2025, Doximity reported a 20% revenue increase to $570.4 million, with net income rising 51% year-over-year to $223.2 million and free cash flow increasing by 50% to $266.7 million [13].