Doximity Stock

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. [Operator Instructions]

And I would now like to turn the conference over to Perry Gold, Senior Vice President, Investor Relations. You may begin.

Thank you, operator. Hello, and welcome to Doximity 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. A complete disclosure of our results can be found in our press release issued earlier today as well as in our related Form 8-K along with a copy of our prepared remarks, all available on our website at investors.doximity.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 onetime 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?

Thanks, Perry, and thanks, everyone, for joining our first quarter earnings call. Today, I'll cover 4 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%. Respectively, these were bold 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. Our Doximity ask product led among U.S. models with the lowest clinical error rates and the highest safety ratings or as Fortune Magazine, "Doximity asked, came out on top."

Clinical AI is rapidly improving. Our winning model demonstrated a 4.8% air rate, while others like Anthropic's Best model, Fable 5 finished with a 13.6% error rate. We believe our outperformance is due mainly to 2 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 per check editors who are continuously reviewing and refining our AI outputs. These safeguards and quality checks are critical for hospital AI steering committees who could 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 8 of the nation's top on a 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. I AI prompt volume was up more than 25% quarter-on-quarter, while our AI scribe notetaking users we were whopping 10x this July over prior. With these gains, we believe we're now the only clinical AI company who is top 3 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. 15 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 #1 most used clinical service in at least 5 categories: networking, news, scheduling, facts and telehealth. We're the doctor's 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 the 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?

Thanks, Jeff. Q1 '27 was a strong quarter for Doximity with robust revenue growth in clinicians adopting our AI suite faster than anticipated. Higher-than-expected AI usage creates a good problem for Doximity, and 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 to 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 and 107% in Q1 on a trailing 12-month basis. Q1 outperformance was driven by 2 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 2 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 1 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 budget 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 doubled down on AI investments 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%.

GAAP EPS was $0.13 per share and non-GAAP EPS was $0.29 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 remains 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 million 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 between $671 million 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 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 in 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 3- to 4-month commitments. As we move into the upfront, the focus shifts towards larger, longer customer contracts with greater inventory available across more therapeutic categories.

For adjusted EBITDA in Q2 '27, we expect a range of $80.5 million to $81.5 million, representing a 48% adjusted EBITDA margin at the midpoint. For fiscal '27, we now expect a revised range of $309 million 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 in our business. This additional spend allows us to further invest in our AI competitive advantages, increased safety and accuracy through Pure Check AI integration across our platform and our growing presence in U.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 1 of the most important technology shifts in medical history. We will leverage our best-in-class margins and main culture to continue delivering leading AI experience for U.S. clinicians. We believe this puts us 1 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.

[Operator Instructions] And our first question comes from the line of Brian Peterson with Raymond James.

Jeff, I wanted to start on the No Harm study that we released a few weeks ago. I know you mentioned that in the 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?

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 1 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 sited authors, physician check editors who are continuously reviewing and improving our AI outputs. There's actually been a couple of studies that have been published now. One was done by NYU and published in nature and then the Stamford Harbor 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 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 the 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 we're -- I think this really plays out in the marketplace is with hospitals. Every hospital has an AI steering committee these days. And they are very much in tune with what's a high-quality output and what is not because they are ultimately liable for some of these outputs. So we're really pleased we continue to lead the way in the enterprise with 165 signed health system clients. I would liken this maybe to what's happened in the frontier or voting assistant AI space with Cloud and Anthropic over the last year. We saw a shift somewhere early this year where it wasn't just individual decision to go to whatever I want to use. It was -- it became an enterprise decision and we think the same thing will happen here in the health care space as more of these studies start to point the enterprise to the right direction. But also as these enterprises get, I think, rightfully concerned about the leakage of patient data and what's called PHI, protected health information out to the broader Internet I can share that we see -- it's almost 30% of the questions or prompts include some form of PHI or patient identifiable information. And again, as a health system or a hospital, you don't want that spraying out across 8 different websites. You need to make sure that's with someone that you have a privacy agreement in place with and as the privacy agreement that is closely followed. So we believe that this will shift the market to more of an enterprise motion. And again, we're proud to be leading the way there with our recent wins at Northwestern, 10 and Michigan, we look forward to leading into this market like we did in the telehealth market. And over the course of the next couple of years, really winning as the best, most accurate clinical AI, but also the safest, most private clinical AI because both will be needed for doctors and patients.

I appreciate all the color. And I noticed you guys did raise the outlook by a bit more than the beat this quarter. I'm curious on what you're thinking about the overall budget growth for calendar year '26. I know you mentioned maybe some innovation budgets are opening up to you, but how would you frame the overall buying environment.

Brian, this is Matt. I think the overall buying environment still feels tight, but certainly more stable. And I think for us, especially as we come into market, was the AI search products, we're increasingly playing now in the AI innovation budget. We're playing now in kind of more of an insight and analytics budget and we're playing -- starting to play. It's early days, but in the search market overall as well. It opens up a lot of opportunity for us. I'll manage your expectations and say it's still pretty early in the ramp. But like we've talked about in the prepared remarks, we have a couple of dozen preliminary customers under contract, and we're building out a pretty strong pipeline. So I think that helps us have a little bit more confidence in the market outlook overall.

And our next question comes from the line of Craig Hettenbach with Morgan Stanley.

Just following up on kind of the year of AI investment as you guys lean in here, and you've talked previously in terms of a little bit of a mismatch where you're investing in the AI search will come I'm not asking for fiscal '28 guidance, but how do you think about just kind of the spend that you have now? And then ultimately, the operating leverage that you might see down the line as AI search ramps up?

Craig, this is Jeff. I'll take a crack at that. So first, I'll highlight what was in Matt's prepared remarks, which is 90% -- over 90% of our AI spend is in the service of doctors, right, helping them get the very best answer. And so it's not a matter of internally token maxing or doing lots of internal tools. It really is serving the broader medical marketplace and again, seeing better-than-expected volume and usage there.

In terms of the economics of the usage, it's early days on our AI search product. But I can tell you, we're earning more than 10x per search in revenue than it cost us to run that today. And again, over time, we probably expect the overall AI cost, if anything, go down as models get more efficient. So we feel good about the unit economics that are being in line with our broader gross margins or maybe even slightly better. And frankly, the TAM that this unlocks for us within pharma has been a real surprise and upside for us. I mean, I'll make the joke I've been at this for 15 years here at Doximity. I'm getting into conference rooms. I never got into before up on high-level floors with C-suite officers because this really is a C-level decision and C-level opportunity and focus for our pharma clients. because AI is so important to how the future of AI will work and how medical decisions will fundamentally be made. So we're excited to have those discussions, and it's really up-leveling our business across the board. So in general, we're excited about the margin opportunity that AI search has for us in fiscal '28 and beyond.

That's helpful. And then just a follow-up from that. Understanding it's a very short period of time you're in the seat. But what has surprised you most compared to the view you had externally before you joined? And I say that, particularly at a time where we're talking a lot about technology and its AI transition. So there's a lot of things in the marketplace that people are trying to digest and anything you would call out in terms of -- again, surprised you the most about how Doximity is positioned and where you guys are going?

Yes. Great question, Craig. I think 1 of the things that I have remarked on, especially from some of my consumer web days, especially at LinkedIn, as just how strong our relationship is with our users and members. The engagement that we have with each member on Doximity would have made LinkedIn blush. And I think what's really exciting is to see just the rapid increase, both in terms of the number of users that are starting to use the clinical search tool as well as how they're using it, right? I think we talked about pumps increasing by 25% quarter-over-quarter. That's a big engagement change from the base of formations that are already highly engaged. And I think when you put the LinkedIn lesson up against Doximity, you realize that the larger and the more engaged your base of users is, the larger your monetization opportunities over a long period of time. That base is growing. It's growing rapidly. And we're just getting started on the monetization front, and I think we feel pretty excited about what's to come.

And our next question comes from the line of Michael Cherny with Leerink Partners.

Congrats on the quarter. Maybe I want to take a step back on all things AI, but dive around the broader AI strategy beyond just AI search. And 1 area I've been thinking about is the work that you've done so far with Scribe. I know it's still an early launch. I know you're still early in the monetization efforts. But can you give us a sense now on what you're seeing on subscribe either as an entry point as a connective tool or -- and if there's something else beyond scribe, I'm not asking about, but some other areas where pieces that you have in place can help bring the totality of the search function together to clients?

Yes. Thanks, Michael. This is Jeff. I'll say we're very proud of our tenant scribe growth and actually been our fastest grower in terms of number of doctors per month picking it up. And a big part of that enterprise hospital motion. It sits right between our health, our dialer and our clinical decision support, ask in a really nice way. It is the connected glue. I believe that 5 years from now, every physician will have an effect a doctor's digital assistant. And the core of that doctor's digital assistant will be us, and it will be the combination of drive and ask our note-taking tool that then leads to a lit search or a clinical decision support tool. And that just makes sense. At the end of the day, when you want to ask questions after seeing a patient wondering what the treatment options might be or what might I have missed in the differential, it's easiest to do that, of course, when you have the whole visit and the pre charting all there. And of course, that's easiest to do when you're flowing out of the telehealth tool that you're using, that's already right there to take the notes and have that available for you. And it all leverages the enterprise relationships we built up over the years again, with all of the HIPAA security SOC 2 reviews, we're really a platform for our health system clients. We're not a point solution. And that's really important. Actually, health systems don't like buying point solutions. So tend to be security vulnerabilities for them and more overhead, honestly, than it's worth. But again, being a platform for them that can be the doctor's digital assistant, I think, is a really powerful place to be. If you look at the leaders in the scribe market today, it's Microsoft. If you look at the leaders in clinical decision support, it's up to date. Again, I think telehealth is the biggest connector between the 2 of those. And I think we're in a strong position here to, again, be that combined doctor's digital system. No one else is top 3 in both note-taking, scribe and top 3 in clinical decision support. We are.

And our next question comes from the line of Ryan Daniels with Blair.

Matt, I wanted to go back to something you said in the prepared comments, I halt was interesting. I think you indicated that the AI programs had shorter inventory counts, maybe just a quarter and as you're moving into the upfront, you're seeing longer contract terms. Is that you guys changing the terms to kind of push them longer given the innovations you're seeing? Or is that just the market more receptive to longer contract terms?

Yes, I can start, and then I'll have Perry jump in with some extra detail. I think for us, it's a pretty conscious decision. We wanted to -- I think we talked about in the prepared remarks, both protect the user experience and also iterate on the product and the go-to-market on what's a new product, not just for us but for our customers. And so we had more conservative inventory caps. We had shorter-term contracts in place for the first preliminary couple of tranches of customers that we've onboarded. As we go into the upfront, we'll open that up more towards larger and larger and longer contracts. And there's some really great signs and signals that we're seeing around demand are, maybe you want to talk about like a few words and how that's evolving.

Yes, absolutely. Ryan, so just to clarify there, too. Yes, I mean I think for next year -- this has proven to be a good test round ahead of the upfront, right? And I think as you go into upfront, the focus shifts towards like said longer contracts, larger contracts you kind of organically have as the product grows more inventory per therapeutic area to offer. And as you feel more comfortable with the user experience, you can kind of get a little less conservative with ad load or cats. So that's kind of a natural progression. Also, as we've been in market and we've taken in feedback, it's clear that there are many other therapeutic areas we hadn't even kind of come to market with that people want. And I think with my RevOps [indiscernible], it's been really encouraging in my seat to see hundreds and hundreds of salesperson requests to price out new categories to kind of work in new ways to do deals, whether it be category-specific or specific key or to a specific target list. There's just a lot of engagement and activity and buzz, and quite frankly, kind of the velocity of the business that we haven't solved a few quarters. So I think it's a good time to kind of get the product down and get the experience down to then kind of sell the larger contracts ahead of upfront. And so then the focus will shift a little bit.

And the only other thing I'd add is, I think it's just really smart to take a deliberate approach and build building a measured way to start and then ramp it up more as you learn. Again, new products for us, but also new products for our customers. And I think we're really starting to find a nice product market fit there.

Got it. Super helpful. And then, Jeff, my follow-up is for you. You mentioned that just having the AI solutions is opening up new opportunities for you to present to leaders in the industry, and it sounds like it's really helping the broader base. I'm curious if you're actually seeing an accretive effect outside of that with kind of your core legacy offerings where they want to kind of bundle AI search and the efforts there with more of the core programs or initiatives to kind of do a 1 plus 1 equals 3 type of HCP marketing initiatives? Any color there would be great.

Thanks, Ryan. Yes. Actually, you put you're finger right on it. Once you start talking about AI search and how it's great to see that this group of doctors has concerns about your side set profile or about how to convert your dosing from a competitive drug to your drug that actually creates an opportunity for us to then have additional use of our telehealth platform to remind them of the dosing changes or the side effect studies that have been done. So it actually adds more utility and greater signal for the rest of the platform. But you really need both. At the end of the day, having signal is useless unless you have reach and having reach isn't as effective if you don't have good signal. And so bringing the 2 together has been a real unlock for us across our core business and across the new AI business.

And our next question comes from the line of Ryan MacDonald with Needham & Company.

Just maybe to start with you. You talked about 165 signed health system clients and that there's more of a sort of maturation and top-down approach within these health systems to sort of have something that's secure and sort of a top-down policy in terms of usage on clinical evidence. Can you just talk about where we're at in terms of what percent of those 165 health systems are live? And what the sort of maturation process looks like in terms of kind of if you want to call it, policing rogue clinical evidence use amongst the physicians within those systems?

Yes, it's a great question. And it's actually right in the middle of what's the foot right now. So I'll begin by saying, we're live at all of those 165. And insofar as we have a privacy agreement in place and their doctors know that they're able to use our AI tools. We're in various stages of implementation of getting into their electronic health records and having the links and making all those things work. And that's a big effort for our team, but it's again another area where we're going to invest heavily because we know from our telehealth experience that once you're into these systems, it's a very sticky place to be, and you're really part of the workflow.

In terms of where they're at from just a legal perspective and looking at all this I would say the concern is slowly ramping. I mean you're seeing a few lawsuits here and there that start to play out. The most recent 1 was against open AI with an individual patient who had hordes of breadth, and it told him to wait it out, sitting his recliner chair for 2 days back and forth, and again, we'll see how this lawsuit plays out, but this patient had a pulmonary embolism, which should have brought him to the emergency room right away. And so those types of stories, I think, rightfully raise the hair and the neck of the AI steering committees and the MedMal committees. And so when you're making high-stakes decisions like this, it's really important to have the right experts there, and it's hard to do. So I'll say this. When it comes to high stakes things, we have pilots that are landing planes in this country. We have doctors that treat patients I think we'll continue to see both those things continue to happen, pilot land plans, doctors treat patients. And when the doctors treat patients at the hospitals, they're going to want to make sure that their patient data is safe and not being put out to some unauthorized AI. So on that front, I can tell you, the largest health system in the country, I know has blocked a bunch of AI players, not us. We're working with them. We're seeing I'd say, half a dozen others who've done similar. We haven't really done a survey of them per se, but I think you'll see, as the year progresses here, we're moving from this kind of age of AI adoption to AI accountability. And I think by this time next year, we'll definitely be looking at a place where the enterprise will be saying, no, this should be the AI you use. And again, I liken this back to putting assistance in anthropic and OpenAI A year ago, it was really try out whatever helps you. Cursor and Claude Code and Codex and all of them. And then really somewhere around the beginning of this calendar year, you started to see enterprises saying, no, this is the 1 we prefer, and this is the 1 we're going to have a security agreement with and volume pricing with again, I think you'll see that similar shift to the enterprise happen as health care AI use becomes more than norm.

Ryan, I'll just add 1 thing really quickly. Again, kind of plumbing in much more recently. I think this is where the No Harm study is very validating for the approach that we've taken over the last year. in that it shows that Doximity is most accurate and safest clinical AI tool in the market today. And that's certainly what our kind of health systems customers are looking for. Our team should be really proud here of the work that they've done over the last year to kind of take what I think Doximity is calling card in a physician's first approach in developing the product. So I think that it's worth calling out because it's really relevant to the question you asked.

That's really helpful color there. And as we think about sort of the next layer on to that and sort of monetizing AI search Will there be some sort of unlocking factor in terms of the revenue opportunity on AI search as sort of we get -- make progress with these health systems sort of rolling out Doximity ask more broadly and then seeing sort of that maybe more material ramp in usage or continuing with your ramp in usage? Is there sort of a knock-on benefit here as we think about sort of the AI search product and ability to sell it?

I mean fundamentally, the AI search product is going to be based on the number of doctors who are using it. And so yes, that unlike will certainly happen.

And our next question comes from the line of Elizabeth Anderson with Evercore ISI.

Appreciate all the color as you talk about the new opportunities that your -- the new AI launch has afforded you guys. I wanted to just think, if you think about your sort of pharma side of the customers, do you have any sense on how big those AI budgets are this year, for example, versus their traditional pharma ad budgets? Is it something that they're just maybe is 5% to 10% of the size? Or -- and then sort of have you had any preliminary conversations with customers about how they're growing that? Because obviously, that should increase over time, 1 would think, in terms of like TAM expansion of opportunity. But I just want to kind of here, like where we are today and where you guys think that we might be, say, next year?

It's a great question. Honestly, I wish I had a better crystal ball to give you an answer. I think if you asked the Board of Directors of the top 20 pharma companies, they wouldn't know exactly where their AR budgets are landing this year because it is such a dynamic space also hear that 1 of the analysts who covers us did do a survey of up pharma buyers and did ask them what percent of their overall budgets they expected to spend on AI and it was around 10% or less than 10% and then when asked who they would spend that AI budget with, we were the #1 choice. And I was really proud of that given that, that survey was done only 1.5 months or so after we first came out with an AI search product. So here, it is just a couple of months into being out in market, we are already the #1 choice by a pretty wide margin in terms of where they would spend their AI this year. And I think that it boils down to us having built a trusted relationship with them over time, having proven our ROI and having a team that knows how to work within the regulatory framework that exists but also knows how to innovate. So I wish I had a better answer though. I can say the overall Google paid search spend by pharma is in the $14 billion range. I mean it's a very big number, but that does include direct-to-consumer and some other categories that we probably won't play in. But at the same time, I also think the ability to be more ingrained in the medical decision-making is a bigger opportunity that strips well beyond what people are using a Google search for today. So we think the TAM is very large. It's certainly as large as the market we're in to get into AI search.

Got it. And maybe as a follow-up, like many of your other products, you sort of launched at a particular gross margin. And I appreciate this 1 might be slightly different. But do you see anything that would necessarily like inhibit the gross margin line of this new offering from starting to trend up over the longer term? [indiscernible] question. I realize is the future of AI, but thank you for trying.

No, all good. I think the short answer is no. I think in terms of our margins this year, it's really an intentional time sequencing, where we wanted to invest and support the kind of user engagement experience of clinical AI and scribe as we grow them. And then I think the revenue opportunity is there to offset that investment as we begin to ramp it up over time. Actually, I think we're pleased that we're starting to see some opportunities to cost optimize even as we make a much larger investment. Some of that's around how we service the product to our users. Some of it is around how we're running our operations, reserving capacity, better forecasting. Some of it is just how we're tuning and optimizing different AI models as well as building our own first-party AI tooling around the products. All of those, I think, will help us get more efficient over time. But at the end of the day, it's really about sequencing our revenue and ramping that up, which will, I think, help improve the margin profile.

And our next question comes from the line of Steve Valiquette with Mizuho Securities.

I think I was also trying to hope here to dig in a little bit deeper on the reacceleration of your capture on the pharma digital marketing spend. So maybe more from just a numerical standpoint. I know it's hard to put numbers on it, but historically, you've obviously talked about the market for pharma digital marketing spend towards practitioners growing in that 5% to 7% range. And then aim a normal environment would maybe grow double that market rate Obviously, a lot of that was pushed the side up for the past year or so. But the things reaccelerating again, maybe just frame numerically where you think market growth is right now, it's hard to predict next year, so I want to ask that, or is it another way with your 7% revenue growth this quarter, do you think you're getting share -- gaining market share at that number or just growing in line with the reexpanding market? Hopefully, that all makes sense.

Steven, yes, I think the -- relative to last quarter, I don't think our expectations for the HCP market growth have materially changed, stable in the mid-single digits. Obviously, we grew better than that in Q1. Our guidance is to grow in kind of in line with that for the rest of the year. A lot of our revenue for this year kind of dates back to last year, when we didn't have an AI monetization product in the upfront cycle and we will this year. So Obviously, we'll see how that goes. We're excited for the building pipeline there and the demand that we're seeing from customers. And I think that should portend well to us being able to outgrow the market again over time. I think the growth rate that we have this year feels probably like more of a blip of kind of timing more than anything else.

And our next question comes from the line of Jessica Tassan with Piper Sandler.

Congratulations on a really strong print and Matt on a really strong first quarter as CFO. So I guess, maybe, Jeff, I think you mentioned the strength in both hospital and pharma customers on just maybe any color on -- or directional commentary on kind of hospitals versus pharma? Are deployments able to monetize AI search in both of those avenues? Or is it kind of 1 or the other? If you could just help us understand the hospital versus pharma split on AI search would be helpful.

Yes. We're doing well with both. So I'd say both are doing equally well in the hospital and pharma side of the business. I will say the budget source are slightly different on each. In the pharma side, this is generally creating a new budget. And so there is a bit of searching around for this new budget that didn't exist a year or 2 ago. But again, it's good ROI. It's good upside, and it's the sort of innovation that I know has the attention of the C-suite. Within hospitals, it's actually sometimes a cost savings because they have been spending a lot of money on clinical decision support and on scribe services from other vendors and we're coming in with an offering that's lower cost than what they may have been using historically. And so there's an opportunity for them to save some money. And so that it becomes more of a budget opportunity for them to choose to work with us. And we're pleased to help them make that change. And again, our margins, as Matt described earlier, I think, can support that quite well. So on both fronts, on both hospital and pharma, we're seeing, again, high interest and growth on the AI products.

Jessica, 1 other thing I'd add is just kind of next back to an earlier part of this conversation, which is talk about unlocking AI budget with pharma customers in particular. And I think that's true. I would also say that across a lot of the conversations that we're having, and Jeff talked about, sitting in new boardrooms to the ones we've had in the past. There's a diversity of funding sources, I think, for marketing and AI search, right? Part of its AI innovation and that's new. And sometimes that feels sexy. I think there's also some of an age old insights and analytics budget that we haven't had opportunity to serve before that we're now able to, with some of the relevant that we can generate in the ad product. And then also search, which Jeff talked about, right? Again, not as much a budget that's been available to us that I think will be more so going forward. And that's exciting. It's exciting to have, I think, a diversity of of ways that we can grow going forward rather than just be dependent on kind of 1 kind of 1 new spending area that is moving very quickly.

That's really helpful. And then my follow-up, you all have highlighted the drug reference component of your AI model. And I know, Jeff, you've got a long history with these types of products. So it seems like the drug reference is a really important differentiator within Doximity Ask. So can you just give us some color on what is proprietary or important here, what should investors know about the drug reference tool? And is it uniquely well positioned to kind of to host sponsored content or just any detail or color that you'd like investors to understand about the drug reference component of the model?

Thanks, Jessica. Yes, certainly, I spent 11 years working on a drug reference company. So I can say that drug reference is a big part of clinical decision support, it's no mistake at all that Up To Date really didn't take off in the marketplace until they acquired Lexicomp, which was a drug reference and put those 2 together. And I think in a similar way, our Doximity Ask product, again, having a built-in drug reference is a key thing. And having it available is discrete data elements. So basically, the AI can work affluently with the drug reference to have the right dose, appear with the right indication to do the drug-drug interaction check, so being able to do all that is 1 of the things that leads to more accurate results. And again, 1 of the reasons why we believe we won the no harm study.

The other thing I'll highlight again, which plays into all of this is we're the only company in the industry that we're aware of that has really leaned into physician oversight to have these 12,000 physicians cited authors who are reviewing the AI outputs on a consistent basis and even layering on their expert views on top of what might be out in the published pubmed evidence world, you really do need to have some of that in some situations because let's face it, there isn't an RCT, a randomly controlled trial that is done in every type of morbidity in question. And so we're able to see what questions are being asked most frequently and being able to provide answers to questions even if there isn't a clear question or clearing answer available on the Internet or in published journals.

So anyway, we're really proud of how this has come together in the fusion of Pure Check, drug reference and AI evidence. And we think this is the reason why we're going to continue to win these independent studies looking at what's the highest clinical accuracy.

And our next question comes from the line of Sean Dodge with BMO Capital Markets.

Maybe just going back to the HCP marketing. You talked about the dynamics in large pharma and change in buying behaviors there. It sounds like that's getting better in places. But just curious on the SMB side. I know you've been able to drive a lot of share gains or growth in that part of the market with the portal. What percent of revenue now comes from like SMB pharmas now? And have you seen kind of similar dynamics in buying play out in that part of the market, too?

Yes, it's Perry. I'm happy to take the question. So SMB has been really strong for us. I think traditionally, if you look at the investor deck our penetration with the top 20 is much higher than with SMBs. I think with all of the brands that are under $100 million. I think the last step we put out, we're around 10% of them we work with. There's a huge opportunity there it's been turbocharged by some of these kind of independent agency partnerships we add in the portal. I can to that team that did really well this past quarter, they grew over 100%. So they're doing really well. I think AI search is also kind of providing more opportunity for that team to get in with certain companies that may not has already gravitated towards other products in the past that are really interested in this. So it's kind of expanding their aperture. And so I think that part of the business has been really up. It's I think something we're super excited about. And it's diversifying our base of business in a way that we haven't seen historically.

Our next question comes from the line of Alexei Gogolev with JPMorgan.

Jeff, I was wondering if you could maybe comment on how you're packaging AI search today? Is it category bundles versus keyword-specific or maybe target let based and what do you expect to change in the upfront versus initial couple of [indiscernible] cohort?

Thanks, Alexei, this is Jeff. Actually, Perry is the expert here. I'll let him answer.

Alexei, great question. So I think what I can say is when we started this was a therapeutic category base and there's a share of voice model. I think as time has gone on, we're trying to make it as easy to buy as possible. We want to broaden the customer base. And a lot of folks kind of jumped right on for share of voice in seat category. But as we learn and we have more folks kind of inquire, I think there's opportunities to kind of layer in some target list buys opportunity to let people adjust some of the therapeutic areas I think kind of add or take out keywords. Some of them are forced to, we call it suppressive hers from a label review. So I think we are allowing for more and more options to kind of interact with the platform, and that is opening up more deal opportunity and driving more business. So I think we very much want to find the right product market fit and we are expanding the ways in which people can buy from us. in 1 of the other unique things about the product as it exists today that will continue to iterate and experiment with is that there's a, I guess, we call it retargeting, but really an ancillary buy that you could do back into the core platform in parallel with the purchase that you do in AI search. So that, I think, can be really powerful as an incremental and large purchase that really supports the core business above and beyond the new product. And to double click on that, so how do you set and monitor AI search inventory caps and ad load to protect the clinical experience and what quantitative signals tell you it's safe to open more inventory.

Carefully. I mean I think this is honestly 1 of the things I love about coming to Doximity is the amount of care that's put into kind of protecting and creating a really high-quality user experience. And so that doesn't even -- I think we're really conscious about inventory caps, yes, but we're also conscious about the quality of the ad. And is it helpful to doctors as it comes into the user experience. So yes, cheerfully to Jeff's point. But there's a lot of thoughtfulness and a lot of, I think, rules and analysis that goes into getting that balance is right.

Alexei, I'll give you a quick parallel in the early days of telehealth. We had very, very conservative inventory caps even at a doctor that was on the product all day, all week, we've still shown on at every 4 or 5 days. As time goes on, utilized they love the product. It feels the ad feels native to the experience at value add for them, there's a little bit more room to loosen those caps. But you cannot fit very carefully. But as time goes on, I think there'll be even more inventory, not just from atlas a little bit less restrictive, but also just more inventory with therapeutic areas.

And our next question comes from the line of Scott Schoenhaus with KeyBanc.

Just wondering how AI monetization will impact sort of traditionally, you're not -- I don't want to call it lumpiness, but you used to see a lot of upfront and then renewals when you see midyear budget unlock. I mean does this sort of smooth out the budget throughout the year? Can you just walk me through how this changes sort of any seasonality from your legacy platform?

Scott, this is Matt. Good actually a really good question. The -- I think a couple of thoughts. I mean, as it sits now, the buying mechanics aren't drastically different than the business has historically been, which is you buy on contract I think this will be sold. I think AI search will be sold considerably during the upfront season, the contracts last different periods over time. If I we've talked a lot about my LinkedIn experience. And I think 1 of the most powerful pieces of it was that LinkedIn evolved and went into a more kind of biddable option-based world over a long period of time. It didn't happen overnight. And by doing that, and unlock the mass of business that kind of grew from a few hundred million dollars and $1 billion to $10 billion. I think that potential and opportunity is in front of us, it's not something that will evolve and change overnight, a different way of buying is not something that we're mailing this year necessarily. But it is out there as an opportunity set for us. And I think that's a good thing. It's a good thing for our customers. And I think it would be potentially a very good thing for our business as well to kind of continue to evolve that buying model.

Ladies and gentlemen, that concludes our question-and-answer session. I will now turn the conference back over to Mr. Jeff Tangney for closing remarks.

Thanks. I'd just like to end by thanking the entire Doximity team for the hard work serving more doctors every day than ever before. So thank you, everyone, for joining. Bye now.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Abby, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Doximity Fourth Quarter 2026 Earnings Call. [Operator Instructions]

And I would now like to turn the conference over to Perry Gold, Vice President of Investor Relations. You may begin.

Thank you, operator. Hello, and welcome to Doximity's Fiscal 2026 Fourth Quarter Earnings Call. With me on the call today are Jeff Tangney, Co-Founder and CEO of Doximity; and Matt Sonefeldt, our new CFO.

A complete disclosure of our results can be found in our press release issued earlier today as well as in our related Form 8-K, along with a copy of our prepared remarks, all available on our website at investors.doximity.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, any subsequent Form 10-Qs and our other reports and filings with the SEC that may be filed from time to time, including our upcoming filing on Form 10-K.

Our forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, May 13, 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 onetime 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?

Thanks, Perry, and thanks, everyone, for joining our Fourth Quarter Earnings Call. Today, I'll cover our financials, our AI investment year, and a couple of key hires.

First, our financials. Q4 ended above the high end of our guidance, with a record $107 million in free cash flow, our first ever 9-digit free cash flow quarter. Revenue was $145 million in Q4, up 5% year-on-year. For the full fiscal year ended March 31, revenue was $645 million, up 13% year-on-year. On the bottom line, our adjusted EBITDA margin was 45% in Q4 and 55% for the full year. Our full year free cash flow was $317 million, up 19% year-on-year.

Okay. Now to our AI strategy, what we're calling our AI investment year. Let me start with the headline. Nearly half of all U.S. doctors now work at hospitals that buy our workflow or scheduling tools. And as we become more integrated into their EHRs, we're increasingly a daily use for them. Our benchmark workflow engagement reached over 800,000 unique quarterly active prescribers in Q4, up roughly 30% year-on-year, a significant acceleration from the high single-digit growth we saw a year ago. Nearly half of all these active prescribers used our AI tools in Q4.

We saw record high engagement across our entire platform last quarter as doctors increasingly turn to us to be their AI assistant. In the 9 months since we acquired Pathway, our AI Search and Scribe active users have tripled. And last month, these users averaged 31 queries each, nearly double January's usage.

In a side-by-side clinical search evaluation completed by 4,700 physician residents last quarter, respondents chose our AI answers over our nearest competitor by 2:1. They prefer our built-in drug reference and peer review. Hospitals are choosing us too. As of today, 140 health systems have purchased our clinical AI suite, including 7 of the top 20 hospitals. Over 250,000 prescribers now have access to our clinical AI suite in a single hospital-approved, HIPAA-compliant workflow. The race is on to build the best Scribe and Search AI for doctors. Our 380-person R&D team is all in to win this, and you'll see a slew of new physician-led features and agents from us in the coming months.

I'm excited to share 2 of them today. First, we partnered with Aledade to provide value-based care AI agents for their network of thousands of primary care organizations. They'll use our Scribe and Clinical AI suite to save time and money. With them, we're bringing AI systems not just to big hospitals, but to small town family physicians, too. Second, we've added ePrescribing to our platform, so our doctors can write a prescription in a few taps after a telehealth call or while on the go. We save the doctor time and the patient money by letting the patient choose their preferred pharmacy from their phone. Over 1,000 prescribers have participated in our beta so far with strong uptake in usage. The back end is powered by our partner, Photon Health.

Okay. Now to AI monetization, which is an important part of today's call. Having grown our AI search footprint so much over the last year, we're ready to monetize against our clients' large paid search budgets. We launched at our Annual Pharma Client Summit in New York last week with 40 marketing leaders from the world's largest pharma companies in attendance. The response was enthusiastic, particularly around using our AI search surface to reach prescribers in the exact moments their researching options, something traditional paid search can't do.

We've already closed our first few AI search deals with top 20 pharma manufacturers, but these are early innings in a nascent and regulated market, and our financial guidance reflects that. We've forecasted minimal AI revenue contribution this fiscal year while allowing for a wider range of AI investments and related expenses meaning higher R&D, compute and marketing spend that will weigh on near-term margins. We think that's the right trade. Longer term, we believe AI search alone represents a multibillion dollar new TAM on top of the existing pharma marketing budgets we serve today.

To put it plainly, we paid $63 million for Pathway AI last summer, and now we're spending against the opportunity it unlocked. This is our AI investment year.

Finally, 2 management updates. As we announced last month, Anna Bryson made the difficult decision to step down as CFO after being on medical leave. We all miss her and wish her the very best. Today, we're pleased to announce Matt Sonefeldt as our new CFO. Over a 25-year career, Matt has led IR, finance and strategy at LinkedIn, Atlassian and most recently, DocuSign. He began on the buy side at Capital Research, giving him a long-term perspective across tech. Matt has advised us externally for over a year, so we know him well. He's a strong operator, a great cultural fit, and he joins us in our San Francisco office full time in early June.

We're also pleased to welcome Dr. Steve Zatz, as our new President. A Cornell, Yale and Harvard-trained position, Steve spent 20 years at WebMD Medscape with the last 7 as President and CEO. We've admired Steve's work from the other side of the field for years. He's advised us over the past 5 months, and it's been great to have him on our side. He's based near New York City and brings deep long-standing relationships across the industry.

To close, we've long been the largest U.S. physician network. And this year, we're becoming the largest physician AI platform. It's a multibillion-dollar opportunity, and we have the team, the tools and the trust to win. That's the company we're investing to build this year. Thank you to 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 VP of Investor Relations, Perry Gold. Perry?

Thanks, Jeff, and thanks to everyone on the call today. Fourth quarter revenue grew to $145 million, up 5% year-over-year, exceeding the high end of our guidance range. Full year revenue grew to $645 million, up 13% year-over-year. Our existing customers continue to lead our growth. We finished the quarter with a net revenue retention rate of 109% on a trailing 12-month basis. Our top 20 customers remained our fastest growing, with a net revenue retention rate of 114%. We ended the quarter with 125 customers contributing at least $500,000 each in subscription-based revenue on a trailing 12-month basis. This is a roughly 6% increase from the 118 customers that we had in this cohort a year ago, and these customers accounted for 83% of our total revenue.

Turning to our profitability. Non-GAAP gross margin in the fourth quarter was 89% versus 91% in the prior year period, driven by AI compute costs. For the full fiscal year, non-GAAP gross margin was 91% versus 92% last year. Adjusted EBITDA for the fourth quarter was $66 million and adjusted EBITDA margin was 45% compared to $70 million and a 50% margin in the prior year period. The primary driver for the change in EBITDA margin versus last year is our increased investment in AI compute driven by a steep ramp in AI usage which is outgrowing overall workflow engagement. We will continue this investment into fiscal 2027 and are excited about the engagement and commercial potential ahead.

For the full fiscal year, adjusted EBITDA was $358 million, and adjusted EBITDA margin was 55% compared to $314 million and a 55% margin last year. We are proud to continue to run a highly profitable business with 14% year-over-year growth in our bottom line.

Now turning to our balance sheet, cash flow and an update on our share repurchase program. We generated free cash flow in the fourth quarter of $107 million compared to $97 million in the prior year period, an increase of 11% year-over-year. For the full fiscal year, we generated free cash flow of $317 million compared to $267 million last year, representing growth of 19% year-on-year. In addition, free cash flow was 49% of revenue for fiscal 2026. We ended the year with $749 million of cash, cash equivalents and marketable securities. During the fourth quarter, we repurchased $91 million of our shares bringing the total value of shares bought back in fiscal 2026 to $432 million, a significant step-up versus the $116 million repurchased in fiscal 2025. As of March 31, we had $493 million remaining in our existing repurchase program.

Now moving on to our outlook. For the first fiscal quarter of 2027, we expect a revenue range of $151 million to $152 million, representing 4% growth at the midpoint, and we expect adjusted EBITDA in the range of $68.5 million to $69.5 million, representing a 46% adjusted EBITDA margin. For the full fiscal year, we expect revenue in the range of $664 million to $676 million, representing 4% growth at the midpoint, and we expect adjusted EBITDA in the range of $323 million to $335 million, representing a 49% adjusted EBITDA margin. Additionally, we expect stock-based comp to increase to the low 20s as a percent of revenue in fiscal 2027 and then trend back down starting in 2028. This is primarily the result of our Pathway acquisition as well as performance-based grants issued in fiscal 2026 for our growing AI team. That said, we expect dilution from these new awards to be more than offset by our share repurchases this year.

Now I'll provide more color on our outlook. We are witnessing a continuation of the trend discussed on our last call, with short-term demand in the HCP digital pharma ad market soft and visibility is still limited. This market environment is the result of policy uncertainty remaining elevated and increased macro risk. Taken together, we expect overall market growth to be modest this year, likely at or below 5%.

Consistent with broader industry trends, many brands still made meaningful upfront investments, but with more modest growth and shorter planning horizons than typical. As a result, we currently have 65% of our subscription-based revenue guidance booked at this point, in line with our 3-year average, however, with more moderate growth incorporated into our guide than prior years. We're encouraged to see second half budget activity beginning to materialize from several brands that were initially more cautious during the upfront. That said, shorter-term spend commitments remain the norm across supplemental buys at a number of other brands.

Within this environment, the dynamic we're seeing is relatively consistent. There isn't much incremental budget available today and when dollars do free up, brand managers are typically looking for 1 of 2 things: innovative new offerings or low-cost engagement options. In many ways, this feels very similar to what we experienced during the early days of HCP-focused programmatic advertising 3 years ago. We believe we are now well positioned to meet the demand for innovation with the recent launch of our commercial AI Search offering, which is already generating strong early interest and allows us to tap into innovation-focused budgets. We began selling the product in late April. And while we do not expect meaningful contribution in the first half of the fiscal year, we do anticipate a more notable ramp as we move into our fiscal back half.

We were deliberate in how we built our AI monetization to be aligned with our physician-first commitment. This focused approach has consistently proven to be a long-term winner. Importantly, comparing our business to 3 years ago, our revenue and engagement are both up more than 50%. As a result, we believe we remain well positioned to outgrow the market over time.

Stepping back, despite the near-term market pressure, our underlying fundamentals remain strong. Engagement is at record levels, product velocity remains high, and we continue to strengthen our AI differentiation through PeerCheck, our integrated platform approach and our expanding health system distribution footprint.

From a profitability standpoint, we remain committed to maintaining adjusted EBITDA margins in the high 40s or better in fiscal 2027, even as we continue to invest in AI compute and PeerCheck and increase our brand marketing spend. As Jeff mentioned, workflow active provider growth accelerated to approximately 30% year-over-year with AI engagement growing even faster, reinforcing that our tools are becoming increasingly embedded in everyday clinical care. We believe we are well positioned to capture a significant share of this emerging growth vector while continuing to deliver strong profitability.

As always, we remain focused on the long term by investing to expand our platform's clinical care capabilities and delivering strong and measurable ROI for our customers. We believe we're still early in a multiyear shift towards AI-driven health care workflows, and we're excited about the opportunity ahead.

With that, I will turn it over to the operator for questions.

[Operator Instructions] And our first question comes from the line of Brian Peterson with Raymond James.

Jeff, I wanted to start on the AI Search launch, and it's great to see a large customer win. Given that you've seen a few innovation cycles in pharma over the years, I'm just curious, how should we be thinking about the appetite for customers to invest in AI solutions? And as we're thinking about a maybe 2- to 3-year road map. Any sense for how big these AI products could be over that time frame?

Thanks, Brian. This is Jeff. Yes, having just come back from New York last week, where we were with 40 of these top pharmaceutical marketing executives. I was surprised, honestly, by the degree to which they are really all leaned in on AI. In fact, a number of the top 20 pharma reported to us that they have minimum budget percentages, 10%, 20% of their budgets that from a top-down perspective are part of their compensation plan that they should be spending on AI.

So we are happy to offer them an AI product now that we've spent the first year post-Pathway acquisition here focusing on physician-first, which we always do and building a better, more accurate product with peer review, with a built-in drug reference, with over 10,000 cited authors reviewing the results and winning 2:1 and head-to-head studies with residents.

But I'll tell you, the pharma interest in all of this is quite high. It provides a lot of insight to them in addition to the -- being there at the place of learning and decision-making. And they're understanding gap, frankly, in their own product marketing, which is really interesting. And again, we're excited to have a whole data spend with them talking about how we can help them with that.

So in terms of the TAM, we do think it's a multibillion-dollar TAM, as we said in the prepared remarks, I mean if you look at how much U.S. Pharma spent on paid search and all, and it's hard to know because it's -- you have to piece together some e-marketer data with some Google data. But it's probably around $19 billion in overall U.S. paid search. Now a lot of that's for consumers. So that's why we're saying multibillion dollar for health care professionals. But we think it's a very large market, and it is incremental to the market we're in today. Today, we are not considered to be part of the paid search market, and so we're excited to be entering that market this last week.

Great. I appreciate the color, Jeff. And maybe just a follow-up on the budgets for calendar year '26. I appreciate that it's a fluid environment. But are you seeing significant changes in how customers are buying just the shorter-term commitments. And I'd love to understand how you guys are thinking about maybe mid-year buying and kind of end-of-the-year buying that kind of underpins that 4% growth for the year.

Brian, it's Perry. Yes, it's a great question. There's noticeable differences this year. I think the overarching theme is there's more uncertainty, policy and now macro. And I think as a result, a lot of these companies, a lot of the C-suite want to retain optionality. And so we're seeing some of these incremental buys are just shorter duration. That's kind of like a consistent theme that's come up. That's a big one. So I think that's kind of leading to less visibility for us. So that's kind of the broader theme. I think the other thing I'll call out and referenced it in my script, it feels like when there is incremental budget, they're looking for innovation, which we now have to offer where they're looking for the bargain bin. They're looking for some cheaper engagements. And that's something that's kind of a world we never really played in. We're a premium offering for physicians, native ad formats and we don't play in kind of the banner ad, cheaper by pound space.

So I think we can now offer them some of what they're looking for, for that limited incremental budget they have and there's a lot of excitement around our AI Search offering. But those are kind of the key trends we're seeing right now.

And our next question comes from the line of Michael Cherny with Leerink Partners.

Maybe if I can jump in on the AI thought process a bit. You mentioned in the script, you talked about the dynamics of offering innovation, and I appreciate all the components you have in place. That being said, obviously, it's a competitive market. There's a lot of investment being made for doctor eyeballs as you see it. As you think about the incremental investment being on compute spend or other R&D spend or people, how are you best measuring yourself to make sure that this amount of spend you have this year is the right amount to further kick off and expand your AI journey?

This is Jeff. I can take that. Thanks, Michael. It's a good question. And the reality is the amount we're spending on compute is going up dramatically, and that's a good thing. Honestly, we're helping more doctors answer more questions, take more notes than ever before. And that's probably the #1 metric we have for ourselves and we'll have for ourselves this year is continuing to grow our AI usage among doctors. We want to be the physician's private AI assistant. I think we are well positioned to be that today. And I'm really proud. We grew 30% year-on-year in our workflow usage, the biggest jump we've ever had from 720,000 to 800,000 quarterly active prescribers.

And to put that in perspective, 3 years ago, fiscal '24, I mean, we've grown our engagement 50% since fiscal '24, so from fiscal '24 to fiscal '26, we've grown our revenue 50% or more in that same period. We've grown our free cash flow per share more than 2x during that period. And I think the AI opportunity that lies in front of us now is similar to what we've had this last few years. So we're excited to lean in and invest here. A lot of it is compute, but a lot of it is also getting out with doctors, having them do the peer review, making sure that we continue to put the most accurate product out there in the market.

Because if you ask doctors what they like about AI, there's a lot of things they'll tell you, and we're delivering on those. But the #1 concern they have, 71% of physicians who've used AI, 3,000 physician survey that we ran a few months ago, the biggest concern is the accuracy of the AI. And the reality is if you just hit the refresh button, you'll get a different answer. And that's not very comforting for someone who's putting their license on the line and making a very high-stakes decision for a patient. And so that's where our investment in having cited authors and physicians, who are experts in the field, do peer reviews, add practice pearls, make sure that the answers are correct, we think, is a big, great long-term investment alongside the AI investments.

And our next question comes from the line of Glen Santangelo with Barclays.

Just 2 quick ones for me. Jeff, I want to talk about the HCP marketing business for a second. I mean, you highlighted the continued regulatory concerns. Could you elaborate on what those concerns are and how much you think that's impacting the market? Is it coming from IRA price reductions? Like what do you think is really causing the hesitation there?

And then secondly, with respect to sort of this new AI, the paid search offering, I'm just kind of curious, could you give us a sense for maybe how the competitive landscape maybe is different here than your traditional HCP marketing business? And maybe what the margin structure might be on that incremental revenue stream.

Great. Thanks, Glen. I'll answer part of this and I think Perry will jump in here with a bit more. So first, I had the word regulatory in my script, in my prepared remarks here. That was referring to our new AI product. And what it really boils down to is they're buying keywords, but they're also buying suppression words and there's a lot that you have to figure out to make sure that the targeting around keywords is done correctly and in a way that we're always proud of the way it appears in front of a physician.

Again, we thought long and hard about this. We've tested it with our 160 doctors at our AI Summit we had here in San Francisco in March. And again, I'm very proud that our commercial offering with AI does not slow down the doctor at all. Others do. Others make you wait and watch an ad. We do not do that. We get you the answer you're looking for as fast as we can and our pharma clients are on board with doing it that way with us, but that does require some regulatory review and testing. And so it's really just why we think the AI revenue will really be significant until later this fiscal year because, again, of the regulatory needs and reviews.

Beyond that, the regulatory environment hasn't changed a whole lot. I mean, obviously, we have FDA changes and lots of things happening. It's a more turbulent environment just generally. And that does lead to a bit of macro, I'd say, concern malaise. I mean, keep in mind, most of our clients are European companies, right? If you look at the top 20 pharma, this is a European-based group. But we continue to do very well, again, in working with them in their regulatory teams and continuing to show them ROI, which, in the end, is really the most important thing.

Glen, I'll just add a little to what Jeff said. I think in terms of how this is different than some of our other sales. So what we're selling, it's a little different for the first time rather than advertisers looking to target certain HCPs, we're selling them conditions, which is a basket of keywords. The product itself is more than just a native ad unit. It's a package. It also delivers insights, it delivers some retargeting capabilities, which makes our other products, the value of those products go up. There's better signal that's being brought in, better intent, being brought in.

So it is a bit of a different sale. And to Jeff's point, it is a little bit of a different regulatory approval process. So it will take a little longer to get these things up and running for the first time. But I think it's incredibly additive and accretive to the entire product portfolio, and we're really excited to be out selling this new product.

And our next question comes from the line of Elizabeth Anderson with Evercore ISI.

Thanks so much for the question. I was wondering if you could talk a little bit more, it's a 2-parter, just about how you envision the gross -- sorry, the margin structure for fiscal '27. Should it be given some of those AI investments and the AI computing costs sort of similar to what we saw in the fourth quarter? Is that the right way to think about it? Or just help us sort of parse apart maybe some of those gross margin versus OpEx investment.

And then secondarily, can you go into a little bit more detail about the new CFO sort of what obviously you saw his experience, but just any other sort of traits that you thought would be helpful for the business as you enter into this new era.

Elizabeth. Yes, I can take the margin question first. So I think the key things to look out for in fiscal '27 for gross margin, I think the big step-up will be AI compute. That's largely driven by kind of a big jump in engagement. The other piece to a lesser extent, there's a little bit of licensing cost for journals for docs. So that's a much lower piece of it. For the rest of kind of OpEx, you now have a team that just got leveled. So there's kind of the expense base went up a little bit. We have a few more AI engineers. So you've got a full run rate of that spend this year. We've got some PeerCheck investments that hit selling and marketing. And this year, I think for the first time, we're really leaning into brand marketing. I think our product velocity is so high. There's so many new incredible AI features we're rolling out. We really want to go out and make some noise around that and educate our physicians about it.

And so I think that's an online presence, that's a kind of a conference presence. We have a team internally that's kind of very focused on this now. And so I think that's kind of an intentional investment that it's a little different than what you've seen for us in the past. We think it's a really good use of funds right now.

I will pass the next question to Jeff. I'll just say I've known Matt for many years from my time covering LinkedIn on the sell side. Matt's fantastic. I'm thrilled to have him here. But I'll let Jeff take the rest of that.

Yes. I'm excited to introduce Matt, he's sitting right next to me here. So I'll just say that we worked with Matt for over a year as a consultant, and he has just really been super helpful. And I feel like a lot of the team already knew them and when we started talking about who we would like and the types of attributes we'd like in a CFO leadership role here. Matt has checked all the boxes. In particular, his experience is very relevant for us. I think the way that LinkedIn has, I think, been very professional, but also high growth and built a marketing solutions business, in particular, using a portal. He helped inform a lot of that portal strategy for us a couple of years ago, and that continues to do well. If we don't get a chance to say later, we have doubled the number of portal users that we have year-on-year. And the portal is a perfect place to deploy more AI insights and more of the sort of search bidding and other things that Perry just talked about a moment ago.

So Matt's been not only, I think, a great leader here, but also someone who brought a lot of industry expertise. So with that, Matt?

Thank you, Elizabeth for the question. I'm incredibly excited to be here. I think for a lot of different reasons. I think when I look at Doximity, I see it as a company that has just incredible platform potential along the ways of other companies that have been privileged to be a part of like LinkedIn, like Atlassian, incredible brand like DocuSign for us, some of our assets are the largest medical professional digital network with 800,000 workflow users, just to say that again, with engagement that's accelerating behind a lot of the AI innovation that we're doing right now, an incredible monetization machine that's grown over multiple cycles, building on that strong engagement and relationship with medical professionals as well as kind of underpinned by the relationship we have across health systems.

I think when you look at, I think the innovation at Doximity is investing in and creating right now, our pharma ad business, in particular, can really evolve from here into that search ad market. And that's something that LinkedIn did an incredible job over multiple years with evolving its ad business. And I think for me, it's really important to be part of a special culture. Doximity is special culture. It thinks about physicians and medical professionals first. It make investments and big choices focused on the long term. All of that makes it just an incredibly exciting place to be. And I can't tell you how pumped I am to get started for this next several years.

I'll just chime in quick and say, sorry, that Matt Blog was named a culture for breakfast, which I love because, of course, culture does eat strategy for breakfast. And the culture here is something that he yes, be a very strong fit for.

And our next question comes from the line of Ryan MacDonald with Needham & Company.

Jeff, as we think about the back half of the year and sort of the mid-year upsells and sort of year-end budget flush, are you viewing the market opportunity in the demand environment as such that the new AI Search product is really the only opportunity to unlock incremental budget from current levels?

And then on the pricing side, I know you mentioned that you obviously don't sort of play down market in sort of banner ads and sort of lower-priced options. But have you looked at or contemplating any sort of pricing changes this year to try to unlock maybe more demand as we go through into the back half?

Thanks, Ryan. This is Jeff, and Perry might help me a bit with this. I'll just say as we get to this year-end, we're excited to have an AI product. We did not have an AI product last year, year-end and the bigger part of the budget season, and we're excited to this year. In terms of do we expect growth from our non-AI products? Absolutely. The growth that we've seen in our telehealth business, I mean we had 1 day this last quarter, where we served 720,000 patients. This was during the big snowstorms in the East Coast. No one else is at that scale. Again, as we've shared, nearly half of all U.S. physicians have an enterprise license to our telehealth service. And that is a great opportunity for our clients to have reach because they're waiting millions of minutes during those visits with patients for the patients to fill out their consent forms and do other things. That's a great learning opportunity, right? It's a magic moment. Doctors there at their desk at home, doing their telehealth today, and they're wearing their white lab coat, and it's a great moment to learn.

So I don't know if this analogy will fly, but I think this is, in a way, like Google, where they have both search and really interesting insights and intent, but then also YouTube, where you get a lot of time and a lot of attention. And I think we brought those 2 together here. I actually think the AI product will help us sell more of our existing products because we have a lot of time and attention and now we know how better to be more relevant.

Ryan, it's Perry. I'll just jump in on the pricing question. So I'd say high level, we're not changing our pricing model or positioning to compete on costs. The brands that know our ROI best are generally not searching for discounts. I can say, looking back 3 years ago, to kind of the last cycle, these low-cost experiments usually underperform on engagement. And eventually, there's a flight back to quality cycle that plays out over the next sometimes 1 year or 1.5 years. And a lot of times, you'll see kind of that money come back our way pretty aggressively when some of those kind of lower cost experiments to really work out quite as well.

I will say on the AI Search front, it's a bit of a different pricing paradigm. It looks a little different. And I think even versus who we compete within that space, I think we're attractively priced out of the gate. So I think there's some opportunity there for folks to say, "Hey, this, there's good value here." But I think we're not the banner ad company. We're not a cheaper by the pound company. So I think our overall strategy doesn't really change on the pricing front.

And our next question comes from the line of Craig Hettenbach with Morgan Stanley.

Jeff, on the time line to monetize DocsGPT, you talked about kind of different medical review. Any parallels to -- if I think back to the point-of-care modules, video modules a couple of years ago in terms of what you went through there and what you may expect this go around?

All right. I appreciate the long-term memory, Craig. And yes, certainly, we did think hard and long about that as we thought about our forecast and it's why we haven't put much in the AI bucket because even if we sell or contract for a lot of business, we are worried that reviews may take a little while. I'll say as I look at this product, it's actually less new for our pharma clients than the vertical video was. It's hard to make vertical videos, especially 3, 4 years ago before we had a lot of AI tools to do it. And the reality, they just didn't have the content, so you have to go literally hire an agency and make a video and do a video shoot and clip it together. I mean that took a fair bit of time and review.

I think this time around, it's not about needing new assets as they call it, new content. It's really just the reviews around the target keywords and the suppression words. So I think it will be faster this time, but we are taking a conservative approach.

Understood. And then just as my follow-up, you talked about kind of putting the doctors first. You have PeerCheck and doing a lot of things to kind of get this product situated. What else beyond that and maybe is that just relative to some of the other newer entrants in this space? Like what do you think is distinguishing Doximity the most today? And then what are you looking to kind of build on to create some separation from new entrants?

Yes. Thanks, Craig. The number one thing I'll highlight is hospitals. At the end of the day, hospitals have a very difficult decision here. They do have some liability with the tools that their doctors use. And what we have seen from our data and usage, it's about half of all of the queries, half of all the queries that doctors ask that have some amount of patients protected information in it. And of course, that is a huge concern for the security departments of these hospitals, and we've seen a number of them start to lock down and block access to the Wild West of AI that's out there.

So we're really proud that we've doubled our queries in a couple of months, but I'd say I'm most proud. It took us 2 full years with our telehealth product, Dialer. And this was during COVID, when things were moving very fast. It took us 2 full years to get to 140 hospital enterprise clients, and we've done that in 2 quarters with our AI product which is pretty impressive. And now we have over 250,000 doctors in the U.S. a lot, more than anyone else, who have the full HIPAA-permission, HIPAA-compliance to put patient data in to our tools to help them provide better care, ask questions, get answers. And I think that's a pretty sizable note.

And our next question comes from the line of Richard Close with Canaccord Genuity.

Maybe, Jeff, a follow-up on that 140 health systems, hospitals that you just mentioned. Are these generally speaking, upsells, they were existing Doximity clients?

Yes, Richard. They mostly are folks who were existing clients. I think we've had a couple of new clients who worked previously clients who came in. But we have 7 of the top 20 hospitals in the U.S. And again, we'll have more next quarter to talk about. They all have AI steering committees and reviews. So I will say that the process to get going here isn't just us adding a paragraph to a contract that already exists. It actually is a fairly exhaustive review process because let's face it. People should be worried about their AI security and AI chaos, especially, again, when you're dealing with a lot of patient information.

So each of these has been a full process. But again, we're at 140 now. We continue to grow. And we're proud now to also move beyond just working with the biggest health systems, but Aledade, as we called out in our upfront script. They are the largest network of independent primary care practices in the country. We're excited to work with Farzad and his team to make agentic AI for their teams using our Scribe and other tools. So I think we've got a nice win here where our AI is helping us win in the small practice in addition to the big health systems.

Okay. That's helpful. And then, Perry, maybe on the shorter duration comments, it seems that's a theme with some others that have reported. But what do you think has to happen or occur for pharma to move beyond the uncertainty? What are they waiting for to get more comfortable with either the pricing or policy environments?

Richard, it's a great question. I think the reality is it's coming from the C-suite down and the risk appetite is not terribly high right now. And I think for better or worse, the policy and macro environment have to get a little bit better for there maybe to be a little more willingness to commit more money upfront for longer. I think eventually, some of these folks realize they're missing out on better economics by not doing that. So I do think that's going to take a little time for macro and policy to get better. Hopefully, we'll have some kind of settlement to this war in Iran at some point. I don't know if after the midterm elections, there's a little bit less noise around pharma policy. It's not -- our specialty is calling these things.

But I really think that's what has to happen. The other piece, maybe it's showing -- getting people comfortable with our new product, AI Search and eventually the nice thing about what we have now in the early days -- and it's still very early. There's a ton of competition we're seeing amongst brands and amongst sales reps, which is really nice to see. And there is some level of selling these categories and competitive blunting. And so there are some brands that want to kind of own a certain category and a lot of times for the entire year, I think it's actually is what they're going to want to go for. So I think the ability to block out some competition, specifically through this product and selling through share of voice, is one of those things that we think will get some folks to commit to longer than -- sorry, 3-month contracts. That may not happen until the next upfront cycle. But I do think there's a component of big competitive blunting that folks may want to leverage for longer-term contracts.

Our next question comes from the line of Ryan Halsted with RBC Capital Markets.

Maybe just to dig into the bookings disclosures. Last quarter, you mentioned starting the year off at record bookings pace. Just curious to hear how that translated into billable revenue? And then obviously, you're guiding to a much slower pace of bookings growth. So just curious kind of how all that has transpired.

Ryan, yes, it's a great question. I think what I'll come back to is January was record bookings growth for January, but January is, I think, the smallest month bookings-wise the entire year. And some of that was simply delayed bookings, things that should have signed by 12/31 that got pushed a little bit. So I think as we went on to the future months, the market has remained soft. That's the reality. I think there's a lot of uncertainty, a lot of want for optionality. And so we haven't -- it's been, I think, a little bit incrementally worse than 90 days ago. That's the reality. We didn't have a war in Iran 90 days ago.

So I think that's maybe the disconnect between strength in January, which some of it was bookings from the prior year and not seeing that flow through so far this year. That's kind of the biggest factor.

Okay. That's helpful. And then my follow-up question, just on the upsell and the commentary around the shorter-term spend commitments, just looking for some clarification. So typically, my understanding of the upsell period is you're talking about the reallocation of dollars over the remainder of the budget calendar year or fiscal year. So how should we think about kind of that shorter-term spend commitment impacting that portion of those upsell dollars? Does that mean like some of that upsell dollars could be allocated beyond the budget year?

Sure. This is Jeff, I'll take this. So listen, if we go back 5 years, I think most of what we sold were annual programs that they would layer on more to in the midyear, right? That's how things work. We're in an environment right now where there's just a lot of change. The AI news cycle, everything, it's moving at a very rapid pace. So the bad news is that, that does hurt our visibility when clients prefer to sign 3 and 6 months sort of commitments. The good news is we do it at higher prices. And actually, we're quite explicit about that. So the year-long contracts I mean they get decent discounts for those upfront commitments and clients understand that if they make shorter commitments, they pay higher prices.

So in the long run, it could work out to be better for us that we're getting better prices. Again, still with a great ROI for our clients. They're making shorter commitments, but we're getting better pricing. So I do think there is a larger shift here, as Perry has mentioned. Folks are just a little more tepid, and the world is changing pretty quickly. And so there is a few of the top 20 clients who have preferred to move away from the traditional annual commitment for their whole budget and for shorter commitments. But again, in the long run, that could turn out to be good for us. from an overall revenue and profit perspective. It does mean, however, though, we have less visibility, and that comes out, obviously, in the guidance that we're providing.

And our next question comes from the line of Steven Valiquette with Mizuho Securities.

I guess also for us, continuing on this dialogue around the revenue outlook for digital marketing spend over the next year or so. Just curious if you're able to maybe give a little more color as to whether or not certain therapeutic categories are worth calling out where you may see incremental or continued softness in marketing spend. And I ask because another public company talked about softness related to marketing spend and vaccines and also like GLP-1s related to weight loss and/or in diabetes. I'm just curious if you're seeing those same trends or maybe it's just more broad-based, but just a little bit more color.

Sure. This is Jeff. Yes, we don't talk about individual clients. I'll say that, I mean, our GLP-1 business is growing very nicely, as you'd expect, right? That overall business is very competitive. Certainly, a world where there's increased marketing spend, and it's growing very nicely.

In terms of number of new FDA approvals and whatnot. It's a good year, not a great year, but it's been a good year, and we think it will continue to be a good year in other classes as well. And again, that's where we see a high percentage of the spend going towards health care professionals as opposed to DTC. And so I think we'll continue to do well there. But yes, I will say there is, clearly, a few companies that are doing very well, and we're doing very well with those companies. So it's funny, the overall iShares Pharma ETF, it's basically flat year-to-date, calendar year-to-date, but you are seeing, I think, more divergence, if you will, in which companies are doing well and which are not. And that's always been the case. But I think a little more so now than perhaps it has been in a while.

But again, on our book of business, we're seeing ourselves growing with the ones we were doing well and growing a little less with the ones who are. So I think you can just index us to the overall pharma growth.

And our next question comes from the line of David Roman with Goldman Sachs.

I wanted to just start on just some of the market dynamics here. I think you've historically talked about the digital HCP for advertising market being in the $2.5 billion to $3 billion range and you've offered some perspective on the growth outlook here. But on the paid AI Search side, appreciating it's a huge TAM you're going after. But is there any frame of reference you can give us on sort of size of that category today? What you think the serviceable addressable market is? And how much of the outlook is dependent on market creation versus shifting dollars over to this type of spend?

Yes, David, this is Jeff. I got to be honest, this is a hard question to answer because this is genuinely a brand-new market. And I'll highlight that with the stat. The average Google search is 2.5 words. Our average Doximity AI Search is 23 words. It's just a lot more context. It's really a very different approach. So even if you were able to identify who has an HCP on a paid search side, which, frankly, you mostly can't.

The amount of specificity around the question and the amount of insight really is at a whole new level. So it's -- it is a new TAM, and I think it may end up being like what Google did to the yellow pages, right? The yellow pages wasn't that big a business or at least it was a few billion and then very quickly Google 10X'd that business. I think that as we look at AI Search for medicine, we could end up creating a much bigger TAM than what currently exists in HCP paid search, even if we could clearly identify what percent is HCP paid search.

So hard question to answer, but I'll say this, the level of engagement from top pharmaceutical companies kind of off the charts. The reality is this is something that's very exciting to see and understand what are the real gaps, what are the real issues that frontline clinicians are encountering with my product. And that, I think, will be good for health care overall because I think we'll start to see better drug development and better education and really start to I think get through all the layers to understand what the key issues and questions are, hard to put a number on that right now.

Understood. And maybe just a follow-up. As you think about appreciating your comments on the macro environment and some of the political and other uncertainty that have faced pharma companies. But coming out of Q1, most companies were raising the revenue outlook for the year. You're seeing your net revenue retention come down a little sequentially and quarter-over-quarter. At what point do you ask yourselves or how do you reassure investors that pharma companies aren't figuring out how to do more with less and the businesses are doing fine without deploying a lot of resources toward HCP advertising? So this is going to be constrained for a longer period of time until they figure out the next area in which to invest.

Yes. Thanks, David. This is Jeff. I'll take that. So I think pharma companies will do more with less, but we're the more. Today, they spend a lot of the mechanics and analytics and data warehouses. In 1 KOL interviews that one of the analysts did a couple of years ago, asked what the fastest-growing area in digital HCP was? And the answer was spending on consulting firms, right, because of all of the consulting that needed to be done to measure the ROI of the programs. And so this allows them to really put money where it works for them, which is where the ROI is. And again, I think we have always won on that front, and we continue to grow there.

So I think there will be efficiency gains and that will accrue to us because, again, we're the ones who are delivering the ROI.

And our next question comes from the line of Scott Schoenhaus with KeyBanc.

Perry, this one is for you. You cited market share growth at 5% or below and sort of same expectations for your own growth. I mean maybe what's the delta between your historic 2x market share versus in line market share? Is it more heavily weighted towards maybe a loss of market share on the AI side and the catch-up there? Or this downshift in temporary lower cost spend from your clients?

Scott, it's a great question. And yes, I think historically, we've always outgrown the market some years more so than others. This year, if you look at our guide, we are looking like, at least at this point, we'll be more in line with the market, maybe slight outperformance. I think the reality is, and you're talking about this earlier, there is a lot of incremental budget, and we saw this 3 years ago. We didn't have really something very innovative in the AI Search kind of commercial department to offer folks until 2 weeks ago. We weren't there in the upfront cycle to provide this. Now we have something. We're playing a little bit of catch-up on the commercial front. We're really excited about what we have to offer.

So that I think will help us. But the reality is and to Jeff's point earlier, because of the Med legal review time line, right, you lose the summer for most of these programs going live. And so you have real revenue coming from them in the third quarter, the fiscal third quarter, so October through December, maybe a little bit before. But so you're losing out of most of the calendar year of having kind of this innovative product in market when you're recognizing revenue, right? So that's part of why it's a little hard to outgrow this year.

The other piece, to your point on the kind of the want for maybe some discounts, some lower-cost engagements or impressions. That's just not where we play. And I think 3 years ago, we went through something similar. I think there were some legacy publishers offering discounts at that time. Maybe we lost a little bit of share of the margin. But longer term, we're in a way better position by sticking to kind of what we do best, premium physician first offering. That's the strategy that has paid off over the long term. We've been around for 16 years. We've been through multiple technology cycles. We might be a little late initially on the commercial front, but in the long run, we have the much better product, the much better physician uptake, the premium offering, and we've actually kind of have the better share gains.

I think longer term, we are very well positioned to continue to outgrow the market. Our engagement has never grown faster we -- I think, over time, the revenue eventually follows that engagement growth, that engagement trajectory. And I think when folks are ready to come back to the premium high ROI channels, we will be there in force.

I'll also just add, I think it was Allen put out a survey. He's been doing for a few years. And when folks were asked, pharma brands were asked who is the platform where you're going to give your money when -- if and when you have incremental budget. And we were by far the leader there. We had the biggest jump I think we've ever had. So clearly, when people get money, they want to spend with us, so I think we're well positioned if and when some budget unlocks hopefully, a little bit more this year.

Scott, I'll just jump in really quickly too. And this is from a total newcomers perspective, and I'm not here full time quite yet. But the -- I think by being an operator and platform companies by having invested in platform companies like I've been really impressed with how the team has been super disciplined on focusing on the physician's first kind of engagement side of the market and creating that because that ultimately is what will create the longer-term growth opportunity. And I think now it's time to invest as well in the pharma client experience around that much stronger engagement. But you don't really see your base of users, all that often go through dramatic acceleration points. And Doximity is saying that right now, really driven by the AI engagement.

So I think that's just a really exciting kind of longer-term framing opportunity to think about how AI monetization really starts to play into the model.

And ladies and gentlemen, that concludes our question-and-answer session. I will now turn the conference back over to Mr. Jeff Tangney for closing remarks.

I'd like to just thank the entire Doximity team for their hard work in serving more doctors every day than ever before. So thank you, everyone, for joining.

Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Thank you for standing by. My name is Joe, and I will be your conference operator today. At this time, I would like to welcome everyone to the Doximity Third Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Perry Gold VP of Investor Relations. Go ahead.

Thank you, operator. Hello, and welcome to Doximity's Fiscal 2026 Third Quarter Earnings Call. With me on the call today are Jeff Tangney, Co-Founder and CEO of Doximity; and Audit Committee Chair and Board member, [ Tim Cabral ], who is stepping in to help out with our CFO, Anna Bryson, currently on medical lead.

A complete disclosure of our results can be found in our press release issued earlier today as well as in our related Form 8-K, along with a copy of our prepared remarks all available on our website at investors.doximity.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, any subsequent Form 10-Qs and our 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, February 5, 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 onetime 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 Co-Founder and CEO, Jeff Tangney. Jeff?

Thanks, Perry, and thank you, everyone, for joining our third quarter earnings call. We have four updates today, our CFO, financials, network stats and AI results.

First, some unfortunate news. Our CFO, Anna Bryson is out sick on medical leave. We miss her here at the office and wish her the best. I know she wishes she could be here too. We've been fortunate to have [ Tim Cabral ], the former 10-year veteran CFO from Veeva Systems as our Audit Committee Chair for the past 5 years. Tim has graciously agreed to speak to our financials on this call and help guide our finance team.

Okay. In happier news, our Q3 financials were solid. We delivered $185 million in revenue, which was 10% year-on-year growth and a 2% beat from the high end of our guidance. Meanwhile, our Q3 adjusted EBITDA margin was 60% or $111 million, which was 7% and above the high end of our guidance. All in, we had a better-than-expected third quarter and another record upfront annual buying season.

Okay. Time now for our network stats. We're excited to announce that we just surpassed 3 million registered members and now have more than 85% of all U.S. physicians and 2/3 of all NPs and PAs on our platform.

Engagement in Q3 was strong. Our unique active users on a quarterly, monthly, weekly and daily basis all hit fresh highs with record usage of our news feed, workflow and AI products.

Our workflow users saw the largest sequential gain we've ever had with a record 720,000 unique active prescribers in Q3. As a reminder, workflow includes our telehealth, scheduling, digital fax and AI tools.

And for the fifth year in a row, Doximity Dialer was ranked the #1 best-in-class telehealth platform by health system CIOs and their teams. Outperforming Microsoft Teams, Zoom and many others.

With an AI glow up, our fax service also hit new highs. Doctors can now query or summarize long faces as part of our AI platform. You'd be surprised how long patient record transfer faxes can be. We had one last month that was 2,600 pages. So with our AI summary and query tool, we're proud to help doctors save both time and toner.

Okay. On that note, I'd like to share our results so far in entering the noisy, crowded and rapidly expanding market for medical AI First, we're proud to announce that over 300,000 unique prescribers used our AI products in Q3. And they're using us a lot. In January, DocsGPT active prescribers queried us on average 4 times a week. So in our first full quarter since acquiring Pathway AI in August, we've already become one of the most used AI tools by physicians.

We've done so by delivering doctors a faster, higher-quality clinical answer. Indeed, in a head-to-head trial of over 1,300 high-prescribing physicians we published today. Doctors prefer DocsGPT at over twice the rate of our nearest competitor. We win most often on drug-related questions as ours is the only medical AI with a built-in deterministic drug reference.

We also do well with complex cases and niche evidence as we have a licensing agreement with [ ASCO ] that gives our users access to their guidelines. And we're the only medical AI to provide full PDF access to over 2,000 medical journals.

We're also doing great with hospitals. We're delighted that over 100 of the top health systems in the country have now reviewed cleared privacy and AI committees and ultimately bought our AI suite which includes both our clinical reference DocsGPT and our Doximity Scribe notetaking tool. In total, these hospitals have purchased access for over 180,000 prescribers, granting them permission to put patient data into our secure tools.

We've won over hospital leaders by being honest and transparent about both AI's strengths and shortcomings. To be clear, no AI has eliminated mistakes or achieved anything near super intelligence. Claims to the contrary are misleading and dangerous.

Our recent Stanford Harvard study found that AI can cause clinical harm in up to 22% of real patient cases. And with overconfident models, those errors can become harder to spot. So we believe physician oversight is essential.

To that end, we now have over 10,000 U.S. physician experts who have reviewed our clinical answers, and that number grows every day. Medical publishers call this peer review. AI researchers call it [ RLHS ] or reinforcement learning from human feedback. We call it peer check. Before a doctor puts their license and their patient's life on the line, they'll want to see a peer check answer first.

Now these aren't just any doctors doing our peer check, but rather the actual experts and authors cited by the AI for each question. For 15 years now, we've painstakingly mapped each doctor to each paper and trial, so we know the right expert right away. Our peer check Editorial Board is coheaded by noted researcher, [ Dr. Eric Topol ], and Former Surgeon General, [ Regina Benjamin ]. In their words, "together, we can build AI systems worthy of our profession and our patients trust". We're gathering with 150 other physician leaders in San Francisco next month to further build this out.

Our focus today is on building AI tools doctors can trust. Outside of hospitals, we have not yet commercialized our AI tools, so we have not included any revenue upside for AI in our current guidance.

At a high level, our strategy is simple. We're strengthening our AI-powered digital platform for doctors, the same way we always have, by putting physicians first.

Okay. 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. And with that, I'll hand it over to our Audit Committee Chair and Board member, [ Tim Cabral ], to discuss our financials and guidance. Tim?

Thanks, Jeff, and thanks to everyone on the call today. Third quarter revenue grew to $185.1 million, up 10% year-over-year and exceeding the high end of our guidance range. Similar to prior quarters, our existing customers continue to lead our growth. We finished the quarter with a net revenue retention rate of 112% on a trailing 12-month basis.

For our top 20 customers, net revenue retention was higher at 117%. So our biggest, most sophisticated customers once again represented our fastest growing. We ended the quarter with 126 customers contributing at least $500,000 each in subscription-based revenue on a trailing 12-month basis. This is a roughly 10% increase from the 115 customers we had in this cohort a year ago. And these customers accounted for 84% of our total revenue.

Turning to our profitability. Non-GAAP gross margin in the third quarter was 91% and versus 93% in the prior year period, driven by a step-up in our AI infrastructure investments from increased usage. Adjusted EBITDA for the third quarter was $111.4 million and adjusted EBITDA margin was 60% compared to $102 million and a 61% margin in the prior year period.

Now turning to our balance sheet, cash flow and an update on our share repurchase program. We generated free cash flow in the third quarter of $58.5 million. We ended the quarter with $735 million of cash, cash equivalents and marketable securities.

During the third quarter, we repurchased $196.8 million worth of shares. We believe repurchasing our shares is a valuable use of the incremental cash we generate above what's needed to reinvest in the business.

As of December 31, we had $83 million remaining in our existing repurchase program. In addition, our Board just approved a new $500 million open-ended repurchase authorization.

Now moving on to our outlook. For the fourth fiscal quarter of 2026, we expect revenue in the range of $143 million to $144 million, representing 4% growth at the midpoint, and we expect adjusted EBITDA in the range of $63.5 million to $64.5 million representing a 45% adjusted EBITDA margin.

For the full fiscal year, we now expect revenue in the range of $642.5 million to $643.5 million representing 13% growth at the midpoint. And we now expect adjusted EBITDA in the range of $355.5 million to $356.5 million representing a 55% adjusted EBITDA margin.

Despite our Q3 outperformance, the midpoint of our annual outlook remains in line with our prior guidance. This is the result of lower Q4 revenue expectations and higher AI infrastructure investment, driven by a strong increase in usage.

During this year's upfront selling season, we saw significant client engagement, strong growth among many top 20 pharma customers and high double-digit SMB growth. We also faced short-term industry-wide policy headwinds.

As we mentioned on our last call, we had observed client uncertainty over how recent policy changes may influence annual budgets. We saw this uncertainty continue through year-end with 16 of the top 20 pharma companies signing most favored nation agreements with the White House, focused on tariffs and pricing between late December and early January.

As a result, our annual selling season was impacted in two ways. First, we saw multiple customers deploy a lower percentage of their annual budgets upfront than usual as 2026 planning wasn't fully complete and some funds remained unreleased. Second, this uncertainty resulted in many deals we normally have signed by December 31, and being delayed and pushed into our fiscal Q4. This is evident in our January pharma bookings growth rate, which is the best we've seen since going public.

As a result of these Q3 bookings dynamics, Calendar 2026 is off to a slower start than usual, evident in our Q4 revenue guided growth rate.

With that said, we have a few reasons to be optimistic that will end our calendar year 2026 with significantly better growth than we started in.

First, we believe the higher portion of our clients' budgets that wasn't deployed upfront will likely be available to be invested later this year during the upsell season.

Second, with [ MFN ] deals now signed for 16 of the top 20 pharma manufacturers, we believe they should be able to more confidently complete and execute their 2026 media plans.

Finally, we see strong inbound demand for our AI member engagement, which we have not yet commercialized, but expect to have a product in market this year. We believe this will allow us to meaningfully tap into our clients' 2026 innovation upsell and search budgets.

Moving to our operating model. We will continue to invest in our doctor trusted AI platform, including increases in infrastructure, development and our peer check program. Even with these investments, we are in a position where we expect to maintain 50% or greater adjusted EBITDA margins on an annual basis.

With that, I will turn it over to the operator for questions.

[Operator Instructions] Your first question comes from the line of Brian Peterson of Raymond James.

In first thoughts and prayers with Anna, I hope you can get well soon. So just starting out on the budgets for calendar year '26, I think in prior calls, you referenced a growth rate around 5% to 8%. I know you mentioned a lot of swing factors that may have influenced that. But I'm curious, is that still the case for market growth? And how much was MFN a factor? Or was that the largest factor in the calendar year '26 dynamics? Any color there? .

Brian, it's Perry. Thanks for the question. So I'll take that one. So our operating assumption right now is that the market will grow roughly 5% in calendar 2026. eMarketer was out a few months ago with the report, and they're looking at about 5% growth for all of the health care and pharma digital advertising, which is down from last year. So that's kind of the growth assumption for the market.

On the second part of the question on [ MFN ], we think it certainly played a role. So you're coming into the very end of the year, when usually we will have signed a large portion of bookings for the next year. And you have many of these top 20 pharma companies that still haven't signed off on these big deals with the White House's [ MFN ] deals, which are pretty broad-based to do with pricing and tariffs. And so it's a large -- I think [ bogie ], a lot of uncertainty at the very end of the year. And so what we found in many of these customers weren't ready to fully sign off on their 2026 plans. They had some funds that were unreleased from the top down. And so that timing really impacted us.

So it was a large part of kind of the impact. And I think it probably manifest in two ways, as Tim called out. So one of them was just certain deals were pushed from -- usually being signed by December 31 or pushed into next year. And you could see our January bookings growth rate, as we mentioned, was one of the highest we've had since on public. It was the highest. And in addition, we -- from what we heard from multiple customers, they deployed a lower percentage of their budget upfront. And so both of those, we think, were largely impacted by [ MFN ], and even played a big part. There's some other policy things going on in the background. And as you know, this year has been very noisy. But we think [ MFN ] happening as late in the year as it did was kind of one of the primary factors in that slow start to the year for us.

Got it. I appreciate that. And Jeff, maybe just a follow-up on AI. Congrats on getting to the 100-plus health systems. I'm just curious, as we think about your customer conversations there, does that change the pace of where innovation budgets start Like, do you expect that number to ramp up over time? Or I guess I'm just trying to think about the AI-oriented spend for your customers. what that ramp looks like and maybe your differentiation as you go attack that AI budget?

Yes. Thanks, Brian. I think we really proved this last quarter that we are the trusted digital platform for doctors, right? With over 85% of U.S. doctors, they really look to us for the latest technology to help them take better care of their patients. We've done this in the past with identity and news and workflow and AI, I have to say I'm exceedingly proud that in our first full quarter after the Pathway acquisition we've grown over 300,000 quarterly active doctors, which is just a terrific pace. I don't think any other company could do that.

And then to sign 100 hospitals, those 100 hospitals are major health systems. So those represent 20% of all U.S. doctors, and those rollouts we're just doing now. So we sign those contracts to start at the beginning of this year, January, and of course, takes a while to get the training plans and to get the rollout plan.

That's really important, I think, for our continued AI growth because, of course, what doctors need to do with these systems is to put in protected health information, PHI patient information to get the right answers out. And if you aren't in a signed agreement with that hospital covered under what they call their [ BAA ], their HIPAA agreement, Well, that's not something the IT departments allow doctors to use just a tool for. So we're proud again to be powering 100 health systems, 180,000 clinicians with our AI tool set.

Your next question comes from the line of Michael Cherny of Leerink Partners.

Yes, I think we'll probably all say the same thing, but really best wishes to Anna as she goes through her medical leave. Maybe diving back in, I'm just going to ask one question. I know your plenty of people are behind me, but diving back in on the demand curve and the bookings side, clearly, the narrative on your stock as well as virtually anything else that touches tech and software in the market is on this dynamic of AI disruption, whether that's similar look like peers, broader AI-oriented players, just the general thought process of a new paradigm going forward.

As you think through the moving pieces tied to your start of your bookings, the January dynamic. How do you think about where the competitive dynamic lies and your ability to continue to capture the same hearts and minds of pharma companies to deliver the same ROI relative to what other peers may be promising them whether they're hitting them or not.

Sure. Thanks, Michael. This is Jeff. I'll take that. So step back, big picture, our core business, very healthy, right? We had over 1 million quarterly active users of our news feed, record high. We had 720,000 quarterly active users of our workflow tools, which is the biggest sequential step up we've ever had. Our telehealth product does very well. I will say last week during the snowstorms, we serve more telehealth visits than we really ever have. It was over 700,000, which is a big chunk of all the care that was delivered in the U.S. that day when people were snowed in.

So we're really proud to have won that telehealth market back in 2020. And we believe we'll win in the AI market here in 2026. And we do that by just having some very large moats around having, again, so many hospitals that have already worked with us and so many doctors.

So the step that I'm actually most proud of on this whole call, is the number of peer check experts that we have, these 10,000 cited authors and experts, doctors who wrote the evidence that made the clinical trials spent years of their lives studying and building this medical collective wisdom that we have. And I'm proud that at 10,000 were bigger than the largest players in the industry. The biggest publisher in the space that's the leader and he's been there for decades, has about 7,000 experts that inform their clinical answers. And again, we're now over 10,000.

So I feel really good about the 20% of all U.S. stocks that we've gotten to use our DocsGPT, our AI already. And again, for the first full quarter after the Pathway acquisition, I don't think there's really any other AI company that could have grown into this market that fast.

To your question about what that means with pharma, today, we do not have a product that pharma can buy in this AI suite. We are just very thoughtful, I think, about how we work with doctors and make sure that things are win-win. We're not just going to slap a full-page banner on top of a product. We know what that does to the experience for the end user. And certainly, we want to be finding ways to have win-wins with industry around this, and we've done a great job of that in the past, and we'll continue to do here moving forward. So we're excited later this year to come to market with some products there. But again, we have no revenue in our forecast for our AI products right now.

Your next question comes from the line of Allen Lutz of Bank of America.

I wanted to ask on the policy uncertainty that pharma has. Can you talk a little bit about your recent conversations with top 20 pharma. Obviously, in the beginning of the year, there was the uncertainty around all the things that you mentioned. Can you talk about the recent conversations? And the expectation is that some of that spend that was supposed to be maybe in the beginning of the year gets pushed out, is there any opportunity for the midyear upsell season to be a little bit stronger. I'm just curious on your recent conversations and whether or not you think that could come into play.

Allen, it's Perry. I'm happy to take that one. So I think what I want to get across is there were many of our top 20 customers, we actually had really good outcomes. So it was not the case of every single 1 of the top 20 had an issue. But there were a bunch where it was very clear that I think the brand managers wanted to be deploying more funds with us, but they hadn't got that approval of this funds released yet. And I think a lot of that had to do with the uncertainty very late in the year. And so they just didn't have access to kind of that full amount of money to go deploy with us right away.

We do believe that the intent is there that when they get those funds released, we will get access to that a little later in the year. So that's, I think, one of the bigger things we've seen at play. Not really the brand manager not wanting to deploy the funds, but you're not having access to them from top down. It wasn't available yet. I think that was kind of the manifestation of it that we saw. But again, there were multiple top 20 customers will get really good outcomes, and we're very proud of those accounts and kind of what we did there. But it was certainly the case that this unreleased funds issue was kind of more permeated more over the top 20 than we've ever seen anything like this before.

That's helpful. And then more of a strategy question, not asking for fiscal '27 guidance here. But as we think about the increasing AI infrastructure or usage costs, I look at the gross margin, year-over-year down about 180 bps. As we think about the way that you're scaling 300,000 physicians on the platform using AI, really, really strong and impressive growth there. You mentioned the 50% adjusted EBITDA margin floor. As we think about you scaling AI and having costs there with no associated revenue, how should we think about the intermediate-term strategy there? Is revenue on the table for the next year or 2? Or should we think about this really trying to build out the user base within fiscal '27 before turning on or even contemplating turning on that space? .

Allen, it's Perry once again. Great question. I think you hit the nail on the head. So the 50% that Tim referenced in the call, I think of that as a floor, not a guide. We have an incredible opportunity in front of us with AI. We've already seen in 1 full quarter how much engagement this can drive. And it's something that we want to lean into, we want to invest in. And we're in a really fortunate position. We already have best-in-class margins. And so we have room to go invest to your point.

I think it's late this year was when we plan to be in market with commercial AI products. So we'll eventually start to put some revenue against this by next year, will pick up even more calendar '27. And so it's probably another few quarters in which there's cost without associated revenue, but that's an investment we're willing to make all day. And if there's upside in usage, a little bit more infrastructure costs I think it's well worth it. As you see with a lot of these technologies, over time, the unit economics start to get better, they go down. So the unit costs are to go down. We saw something similar happen with the early days of telehealth. And over time, the economics get better for us. We got bigger negotiate better rates. So that won't be a big burden for too long.

We're also investing in peer check. And I think peer check is something that will really differentiate the offering. That trust component is huge for doctors. We have an opportunity, like Jeff said, we can go tap into this network with 3 million members. And in a month or 2, get 10,000 expert reviewers to kind of come along and review a lot of these answers. And so we've got something that nobody else can do. And I think that investment, again, well worth it, differentiated offering, and I think that this will pay dividends over time. But yes, I think of that 50% as a floor.

Your next question comes from the line of Glen Santangelo of Barclays.

Jeff, just two quick ones for me. In the prepared remarks, I think you guys were commenting a little bit on fiscal '27 where I think you said you expect to end calendar year '26 with significantly better growth than where you started. So looking at your fiscal 4Q growth, you're assuming 4% revenue growth. So is the assumption that you'll end the year much better than that 4% for the full year. I just want to clarify what you're saying.

And then I just had one other follow-up. Jeff, at this point, it's pretty clear that the public markets, they've been very punishing the companies with this perceived AI disruption and whether it's a reality or not, we'll ultimately see. But when you look at the public markets, they may not be appropriately valuing your business. And so I'm just kind of curious to get your take on this whole sort of dynamic that we're seeing? I mean, you're a big shareholder in Doximity. I mean does Doximity need to be a public company just given the strength of your balance sheet?

Glen, it's Perry. I'm happy to take the first one, and then I'll pass the terminal multiple question to Jeff. So great question, Glen. Yes, I think the way to think about it is a slower start to the year, with 4%, but we actually feel really good about our ability to exit the calendar year as a double-digit grower once again. And the reason for that, there's a few, I think, this year, a little bit more of a ramp. But one of the reasons is we think we -- that those funds that hadn't been released earlier in the year will be released as we go through the year. And as they get released, we've got one of the highest ROIs in the market, and we think folks will come to us because of that with those funds.

In addition, we plan to the end market later in the year with the commercial AI product. And I think by having that, we will be able to very quickly tap into kind of those innovation upsell budgets and search budgets. And so yes, I just want to very clear, I think we will end the year exit the year as a double-digit grower. I think I will reemphasize we can -- we believe for the entire year without giving guidance, but for the calendar we'll be able to outgrow the market. as we have every year before. But that's probably the most we're prepared to give at this point, Glen.

Great. Glen, this is Jeff. I'll just say I think overall AI is a tailwind for us. I think the opportunity in front of us to change health care, wow, it's never been better. And again, to see 300,000 doctors come use our product here in the first full quarter after acquiring something and growing with it. I mean, we're just really excited. I think the opportunity to make being a doctor a better job, it's really fundamentally changing, I think, the way we're going to look at the world here in a few years.

And I'll just say the only problem from the doctor's point of view, when you look at AI today, you really can't trust it. And the truth is they're putting our license on the line with every patient. And these are life or death decisions that are, I mean, very, very important. And so there's still this need to go check multiple different sources or to go back to the textbooks, which are trusted.

So AI is fast, but they want textbook trusted and AI fast. And again, that's where I think peer check is just an incredible opportunity for us because these 10,000 noted authors, they're putting their name at the top of that. And that name up there, that's trust. That's showing that an expert in the field reviewed this answer and that it is correct, and I can get to it quickly with the speed of AI, but again, with the trust of the traditional textbook and expert approach.

Your last question about our public market trading, I don't know, I try not to pay too much attention to it. I'll just say that there are certainly investors asking some of the same questions that you just asked there of us. And again, from our point of view, we're just proud to be able to continue to be a company that is both serving doctors every day and able to generate cash flows that are attractive.

Your next question comes from the line of Elizabeth Anderson of Evercore ISI.

Thank you very much for the question. I guess my question is, how do you guys see the monetization opportunity evolving over the course? I know you talked about it potentially over the course coming later in the year. But I'm just curious how you -- just kind of what your early thoughts are at this point on that opportunity, both in terms of sort of model and then how that might sort of play into your broader advertising portfolio.

Liz, this is Jeff. I'll take that. I'll just say, at a broad level, there's a whole new TAM here that we traditionally haven't paid in, and it's called paid search. And if you look at that same eMarketer report that Perry referenced, from a few months ago, you'll see that 55% of digital marketing spend in health care is for search.

And so I think this is a large market and a big opportunity for us. We're not going to talk much about our plans there. I think we are very good at doing this, and we don't want to tip off others too much. But suffice it to say, we think there's a really large opportunity here. And again, there's a lot of client excitement about it as well.

Your next question comes from the line of Craig Hettenbach of Morgan Stanley.

Just a point on 20% of health systems using AI. Where do you think that could go in the coming years? And how do you think about just kind of reference cases of those health systems that adopted in terms of bringing others kind of into the fold?

Craig, this is Jeff. Thanks for the question. So we publicly said prior quarters that we have 45% of all U.S. physicians through their health systems that use our telehealth tools. I think that gives you a sense of some of the opportunity here.

But I'll just say getting to 20% in 1 quarter when every major health system has not only a privacy review committee, but also an AI review committee, and they only work with trusted partners.

And I think over time, the tech here is increasingly a commodity. I think we're seeing this across a lot of different areas of AI. It's the trust and the relationships and the platforms that really matter. And we hear from our clients all the time, the CIOs of these hospitals, they don't want to buy point solutions. They don't want to buy features. They want to buy platforms. And again, between our scheduling and our facts and our telehealth and our other tools, we really are one of those platforms that they turn to.

Got it. And then just as a follow-up, nice strong start in terms of momentum post the Pathway Medical acquisition. But anything surprised you at this point now that you're kind of operating the business and things that whether it's when you went in, what you saw the opportunity set versus how it's evolving? I know it's only a few months, but just what's been kind of the feedback in terms of pathway.

Thanks, Craig. We've been really happy with the Pathway acquisition, and its speed of adoption and growth has probably been the best surprise here. The team, we're also getting along very well with and they continue to really lean in, which is terrific. So we're really pleased with the acquisition and the growth.

I would say, if anything, the semantic data sets that they brought us, the understanding of how to read through the 2,000 journals that we provide -- uniquely provide full free PDF access to for our doctors and that drug data set that's built in. Because a lot of questions are drug-related questions, and those are the ones you really don't want to get wrong. And the reality is LLM do struggle with this a bit.

I will say the largest player in this space who's been around for decades, they've added an LLM to their product, but they haven't added a drug reference to their LLM and they do that on purpose because they're careful, and they see that LLMs really struggle with drug information with dosages with things that are easy to move a decimal point, one way or the other and make a really serious error. So we think we've got some great IP in the Pathway acquisition, but we also got a great team and great growth this past quarter.

Your next question comes from the line of Ryan MacDonald of Needham & Company.

Maybe to ask on the budget question a little bit of a different way. Obviously, understand the headwinds with [ MFN ], but obviously, some of the other regulatory sort of talk and chatter around has been around sort of closing some of these direct patient marketing loopholes on TV and other platforms. Are you seeing in any of your conversations pharma customers starting to react to that in terms of how they're shifting the allocation of their budgets, where maybe this potentially creates a tailwind and having more spend to the HCP budget over time?

Ryan, it's Perry. I'll take that question. Yes. I mean we've been having that conversation internally and externally for a little while now about D2C and is it going to benefit us.

I can say at least this upfront season, we didn't see it happen yet. I think part of the issue was all of these exist and warning letters went out in September. And I think people forget already, but right after we had the longest government shutdown we've ever had. So I don't think there was much on the enforcement front for a few months.

At the beginning of this year, I think there's some examples of that picking up again. And I think if the FDA kind of really pushes that enforcement, you will find probably more and more of these brands having to add a lot more small print fine print to some of their TV ads. It will make the ROI not look so attractive.

And I think over time, the smart marketers will start to move that money to HCP where and when they can. But in terms of has that impacted us positively yet. We just haven't really seen it. And so that's just kind of like where we are today.

Very helpful. Maybe as a follow-up on the AI side of things. great to see all the success in sort of these hospital and health system-wide evaluations. As you're having conversations with your health system partners right now, how much of, let's call it, the AI strategy is a sort of top-down facility or system-wide strategy versus more sort of, let's call it, one-off physician usage of individual tools. And our health systems trying to grapple with maybe changing it to the former versus the latter.

Yes, this is Jeff. I'd say it's been a mix, honestly, both bottom up and top down. That said, I'd say the early discussions we had in September, October with our clients about this, of course, it was with the CIO, CMIO suite. And then they try out the product and then they show a few friends and then it becomes more bottom-up.

I will say that I think you'll see much more vigorous AI enforcement. It's been a little bit Wild West to be totally honest, in the AI world with hospitals this past year. But there are a lot of real concerns that they have about leaking patient data and liability and the accuracy of information. So I think you'll see more of an enforcement regime this year. And again, I think we're on the right side of that and working with them.

So we've been doing this for 15 years. We are the trusted platform for physicians. We have a process to work with our hospital partners and our doctors to do this I think, again, we're just very well positioned to capture this AI opportunity.

Your next question comes from the line of David Roman of Goldman Sachs.

I wanted just to start with maybe some of the signposts that you're using to project the acceleration in both your business and in the market through the balance of the year. And why as pharma companies look at their budgets, like how you think they're balancing, figuring out how to do more with less versus deploying resources in an accelerated manner throughout the year?

Yes, David, this is Jeff. I'll take this first, at least. I'll say this in an efficiency environment, digital marketing does pretty well. Why? Because it's the highest ROI. And I'm really proud that our portal usage has doubled over the past year. This is the number of clients we have using our portal. And the great thing about our client portal is it lets them see their ROI.

We have IQVIA data in there. They can actually look at their -- what they call script lift or [ NRx ] lift on a monthly or quarterly basis. And so this past year, we had a record number, 965 ROI studies that were done by our clients. And we're still at that same number we were at our IPO, about 10:1 median return on investment for our clients. So I do think an efficiency-driven environment, I think digital marketing will do well, especially when every $1 you put into it, you get $10 back.

And then maybe just one of the things you talked about earlier this year was on the recruiting front, and we did see kind of a step-up in stock comp associated with bringing on AI talent. And it seems like the talent race is on in that segment? I mean you operate in a very, very talented competitive environment with anthropic opening offices and others right around you. So how are you thinking about talent retention and recruiting and making sure you keep the right people on board here, especially as the stock price has drifted lower.

Again, this is Jeff again. Yes, the talent wars definitely are heating up. And yes, we are retaining our best people, offering them stock grants. And the reality is, I think we've done very well at keeping, I think, a very mission-driven team here who really do love humans, to love doctors, to love working with doctors who take care of humans.

So it's, I think, an advantage in this market to be a company with such a long-held purpose and such deep roots in the medical industry. I find that the folks that we have on our team who are sons, daughters or married to physicians really are the ones that really, I think, are the cultural torch carriers for us because they come in every day, every week with examples of how doctors have used our products to, again, save them time or needed better care.

So every week, we share what we call [ Doc love ], which is an e-mail or a message that's come into our inbox unprompted from a physician talking about how we've helped them that week take better care of a patient. So there's no doubt, you'll see that we will have to fight the talent wars and we will have people who, I think, get bigger stock packages, but that's all part of leading into this opportunity, which we think is pretty fantastic and it's playing out in our margins as well.

Your next question comes from the line of Scott Schoenhaus of KeyBanc.

Best wishes for Anna here. I guess, Perry, as a follow-up here, you talked about the demand getting pushed out from December into January from a select group of large pharma, you mentioned January pharma bookings having the best growth rate ever. Do you mind providing more color on what exactly this growth rate looks like? And then I know it's still only the first handful days of February, but are you seeing the same kind of similar healthy growth rate in bookings in February?

Scott, how are you? Yes. So January bookings growth rate was the best we've seen since going public. I can say it by a wide amount. It's a clear indication of the delayed decision-making we referenced. It was part of the impact, but less budget deployed upfront also played a major role. Aren't going to quantify beyond that. We never provided absolute bookings figures. And it's just really early in February. So not much to add on that front. .

Understand. And then back to the market growth rate and your ability to get to double digits exiting the end of the year. I mean, what -- how should we think -- you had -- I think you took some market share here in the midyear selling season this past year. How do we think about your ability to take market share as you scale and ramp throughout the year? Is it you historically said we can take double the market share that the industry grows at.?

Yes, Scott. So I know we've talked about that in the past. I don't think the 2x is always a hard and fast rule. But we continually outgrown the market since we've been public. I think part of it has to do with the fact that we continue to innovate and continue to grow our engagement. We continue to have best-in-class ROI.

And I think as soon as you come to market with something really new, like an AI commercial product. You have -- our customers always have these innovation budgets. And -- those are the types of things that kind of are certainly always available for interesting new offerings. And so AI will allow us to tap into those budgets possibly search, as Jeff referred to, and so I think there are a lot of factors that will put us in a good position to get to that double-digit exit growth rate for the year. But that's probably the most we can say on that without giving official guidance.

Your next question comes from the line of Jeff Garro of Stephens.

I was hoping you could give us some kind of update on your strategy and progress integrating your workflow tools with the broader health care technology ecosystem. More specifically, curious about integrating medical AI and scribe with electronic health records.

Yes, this is Jeff. I'll respond. So again, we're really proud to work with hundreds of health systems, and we do integrations with many of them. The integrations to date have been mostly around our telehealth service offering, but we're working on other integrations as well. I don't have anything specific to say on that front today, but suffice it to say, our scribe product does do very well among individual doctors that saves them a lot of time. They like that it's personal to them, and that it's something that they can carry with them in their pocket anywhere at any time. And really, the integration isn't that heavy way when you think about it. It's mostly a cut and paste.

The other thing is our dialer tool, which is our most popular workflow tool for telehealth, we have that button right there in the dialer call that allows you to go and scribe the visit, again, which is a great point of integration for us to be in. And again, it's not hard to have a receptionist staff member go cut and pace that in at the end of the day, but we're also working on integrations with folks.

And I'd just end by saying, particularly with our telehealth product, I think we have many moats. And we've seen new competitors come and go here. We've had probably five direct competitors over the years. that have tried to build a physician-focused dialer. I will say it is very hard. It's painstakingly difficult to go and do all the things you need to do with all the telcos, and we have unique relationships with the telcos to make sure that the caller ID and the station all works correctly.

And in the end, that manifests itself into pickup rates that we have that are 3x what others have. So in short, when you call a patient using Doximity dialer, you will not be marked as spam, it will not be flagged as spam risk. You will get through to that patient with a number that they recognize and that's a pretty big moat for us.

And again, we've seen a number of companies try to come at us here. Our dialer usage has actually gone up more in the last quarter, nice and steady than we've had in the past.

Your next question comes from the line of Stan Bernstein of Wells Fargo Securities.

On the medical AI, the 300,000 unique prescribers that you talked about, if we think about the workflow, I'm curious, how are the providers using these features? Are they opening up to the app and going directly into the medical AI? Or are they interacting somewhere else on the app and organically getting redirected I'm curious if you can talk about the workflow that's getting into use this feature.

Thanks. This is Jeff. Yes, the full platform flow, which we're happy to demo for folks if they'd like to see is you start with the telehealth visit, you're talking to seeing a patient, it scribes the visit at the end of the visit. It writes what's called a so note for you. The A and the P in the [indiscernible] note is called assessment and plan, and a lot of times, doctors will want to double check their assessment and plan. And again, that's just a one click into our DocsGPT AI to do an evidence-based search and double check your assessment and plan. So there's a lot of on-ramps, honestly, into the AI.

The other one is from our news feed, which has more than 1 million quarterly active users last quarter, after reading an article about something new in medicine, maybe I have a follow-up question or 2. And again, that leads you directly into our AI, which can do more research and help you understand the full article or new news a bit more.

Again, we're a platform. We're not a feature, and that's a huge advantage here. In the end, being a trusted platform for physicians for 15 years, it's a place that they go -- they're spending, again, most of their time doing the workflow, news feed, identity, all of that comes together into also having a question-and-answer tool.

And maybe a quick one on bookings. Just when you're having these budget discussions, I'm curious, are customers sharing concrete budget expectations? Or is it still kind of like a theoretical framework and maybe there's some squishiness and that will all work out in the company months or quarters, thanks.

I think it varies. I think there are, like I said before, brand managers who would intend or want to spend a certain amount with us, but it really depends on kind of what gets deployed -- sorry, what gets released to them and when.

Obviously, others that signed on at a large scale by December 31. We've got a good sense, obviously, signed of what they're going to do with us. And a lot of times, they'll make that decision if they can, if they're a position to do that the fund has because by doing that, you kind of unlock the best possible economics. But like I said, it varies from customer to customer. And I think there are folks who would like to spend more with us and just hadn't gotten access to those funds yet. And hopefully, if and when those funds become available, they'll kind of spend kind of where they've indicated they may be able to.

Your next question comes from the line of Ryan Halsted of RBC Capital Markets. .

Maybe just a follow-up on the pharma marketing budgetary decisions. Just curious if you are seeing any change in -- or anticipating any change in the cadence of budgetary decisions by your large pharma customers? Is sort of the traditional seasonality of the upfront and upsell seasons kind of still the norm? Or has there been any shift to a more periodic review and decision-making process?

Ryan, great to see you on your first call with us. It's a great question. I think the answer is this is an anomaly. This -- what happened at the end of this year was very odd. I think even for our customers, it was odd. And so this isn't what you would typically see. There wouldn't typically be this much uncertainty very late in the year. And I can tell you that, I think, like I said in my last response, it is to your advantage to buy at scale for the full year before December 31 because you unlock the best possible economics and soft benefits with us.

So I think this is truly an anomaly for this year, and we're working through that. I can say, if you look back 2 years, it's a little bit different, but we had kind of a similar dynamic where 4Q was a mid-single-digit revenue growth rate. It had to do with the fact that we had sold a lot of point of care and content wasn't ready. But things -- I think a lot of the programs, the launches were delayed -- and when you went to for the first quarter, there was a nice step-up in revenue growth as those things kind of normalize a bit.

Not a perfect compare, but this isn't the first time we've seen something like this. But in terms of is this a new norm for the upfront season. We think this is really an anomaly. This is not something that we expect to continue.

Got it. That's helpful. And then for my follow-up, just any color around demand for the multi-module integrated offerings .

Yes. So I can take that. So Doc dynamic this quarter was about 45% of our bookings compared with 18% a year ago. So it was still a significant part of the selling season Again, there's only so many people that can buy it because the minimum is high to get access to it. So it's still an interesting product for many. It's still really good tech folks are interested. But yes, the update is about 45% of the programs we do dynamic in terms of what we sold in the third quarter. .

And your next question comes from the line of Richard Close of Canaccord Genuity.

Is lot of the question already answered. I was just wondering, Jeff, if you could go into a little bit more detail on the background study, referenced with the docs using the AI and how much impact that maybe has made in terms of gaining additional utilization with other providers.

Yes, Richard, I'm glad you asked. So yes, we did do a study as we do our own research with talks all the time. And again, we're about to have doctors here in a few weeks to go really deep on this for a few days. But yes, we ha d 1,300 high-prescribing physicians. So these are very busy physicians, who took the time to go and actually asked the clinical question that they face in their practice that day and do a side-by-side comparison of our AI versus other AI in the marketplace. And the net of it was, we feel really great that we performed at twice the rate. Our competition did in this space. And with good reason, I think, around the better drug reference, the full 2,000 journals access and even some smaller things. They like -- are formatting of tables. They like the speed of the product were faster than any other product on the market.

So yes, we're proud to do that research, and we just put it out today so more can see it. I do think they probably use the product and maybe told others about it. That's how we got to -- from that 1,300 trials to 300,000 to give you a sense of how quickly were it spreads in medicine. But to be fair, most of that study was done in January. So pretty recently. So I don't think that, that was a meaningful part of our 300,000 number.

We've run out of time for any further questions. I will now turn the conference back over to Jeff for closing remarks.

Thank you all for joining our third quarter 2026 earnings call. We appreciate the feedback. And I just want to say thank you to the entire team here who continue to work incredibly hard to serve our physicians every day. Thank you. This concludes today's conference call. You may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome you to the Doximity Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

I'd now like to turn the conference over to Perry Gold, Vice President of Investor Relations. Perry, you may begin.

Thank you, operator. Hello, and welcome to Doximity's fiscal 2026 second quarter earnings call. With me on the call today are Jeff Tangney, Co-Founder and CEO of Doximity; and Anna Bryson, CFO. A complete disclosure of our results can be found in our press release issued earlier today as well as in our related Form 8-K, along with a copy of our prepared remarks, all available on our website at investors.doximity.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, any subsequent Form 10-Qs and our 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, November 6, 2025. 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 compararable 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 onetime 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 Co-Founder and CEO, Jeff Tangney. Jeff?

Thanks, Perry, and thank you, everyone, for joining our second quarter earnings call. We have 3 updates today, our financials, network growth and AI products.

First, our top line, we delivered $169 million of revenue for the second quarter of our fiscal 2026, which represents 23% year-on-year growth and a 7% beat from the high end of our guidance range. Our bottom line was also strong in Q2, with an adjusted EBITDA margin of 60% or $101 million, which was 15% above the high end of our guidance.

Our adjusted EBITDA grew 32% year-on-year, while our free cash flow was up 37% year-on-year. In short, we had a better-than-expected first half led by our AI optimized integrated programs and our portal. Our CFO, Anna will provide more detail on that in just a minute.

Okay. Turning now to our network growth and engagement, which reached new highs in Q2. Our news feed led the way with an all-time record number of quarterly active prescribers and double-digit growth in the number of articles read or tapped. Physicians really liked our new “Ask DoxGPT feature, which allows them to ask follow-up questions and dive deeper into clinical topics directly from our newsfeed.

On the workflow side, more than 650,000 unique prescribers used our workflow tools in Q2, which was also an all-time high. As a reminder, our workflow tools include our telehealth, scheduling, digital fax and AI tools for clinical reference and documentation. Our AI tools once again grew the fastest with quarterly active prescribers up more than 50% from the prior quarter. We're proud to be both the newsfeed of medicine and the go-to platform for AI-powered clinical workflows.

Okay. Now for an update on our Pathway acquisition and AI scribe growth. Just 7 weeks after announcing our acquisition, we fully integrated Pathway's entire medical data set and AI models into DoxGPT now live across both our web and mobile apps. We believe this integration gives us a couple of first in medical AI.

Unlike others, DoxGPT has a fully integrated drug reference. And when a physician taps the mic and asks a drug-related question, peer-reviewed answers will appear instantly in under a second. Clinicians on the go can now just ask DoxGPT on their phone to check for dosing, side effects or interaction.

We're also the first medical AI to provide direct full text PDF access to over 2,000 medical journals, including all the top titles through a unique referral with Research Solutions' software. Doctors can now go from question to summary to the original peer-reviewed source in just a few clicks. No paywalls, proxies or library log-ins.

I began my career over 20 years ago in clinical reference at Epocrates, and it's gratifying to see how far this point-of-care technology has now come. With our recent upgrades, we believe we're the fastest, best real-world AI medical reference in the market today.

Our new AI scribe is also becoming a clinician favorite. As a reminder, Doximity Scribe is our HIPAA-compliant ambient notetaking tool. And in Q2, our number of quarterly active users nearly tripled versus Q1. This rapid uptake is a testament to the power of our platform, our market-leading telehealth tool, Doximity Dialer added Scribe integration last quarter.

So now for the over 300,000 voice and video visits we conduct on an average weekday, doctors can add our Scribe with 1 click and give full focus to their patients, not their keyboards. As one of our family medicine doctors put it, "I just love Scribe. I saw 22 patients today till 5 p.m. and was out of the office by 5:15." Amen to that. AI that gets you home in time for dinner. We're proud to help clinicians reduce their admin and cut down on pajama time.

Okay. 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. From record engagement to major leaps in AI, we're building tools that help doctors provide better care for their patients. I couldn't be more proud of the work we're doing or the team behind it.

And with that, I'll hand it over to our CFO, Anna Bryson, to discuss our financials and guidance. Anna?

Thanks, Jeff, and thanks to everyone on the call today. Second quarter revenue grew to $168.5 million, up 23% year-over-year and exceeding the high end of our guidance range. Similar to prior quarters, our existing customers continued to lead our growth. We finished the quarter with a net revenue retention rate of 118% on a trailing 12-month basis.

We ended the quarter with 121 customers contributing at least $500,000 each in subscription-based revenue on a trailing 12-month basis. This is a roughly 16% increase from the 104 customers we had in this cohort a year ago, and these customers accounted for 84% of our total revenue.

Turning to our profitability. Non-GAAP gross margin in the second quarter was 92%, flat versus the prior year period. Adjusted EBITDA for the second quarter was $100.8 million, and adjusted EBITDA margin was 60% compared to $76.1 million and a 56% margin in the prior year period. We are proud to continue to run a very profitable business with margin expansion.

Now turning to our balance sheet, cash flow and an update on our share repurchase program. We generated free cash flow in the second quarter of $91.6 million compared to $66.8 million in the prior year period, an increase of 37% year-over-year. We ended the quarter with $878 million of cash, cash equivalents and marketable securities.

During the second quarter, we repurchased $21.9 million worth of shares at an average price of $61.62. We believe repurchasing our shares is a valuable use of the incremental cash we generate, above what's needed to reinvest in the business. As of September 30, we had $280 million remaining in our existing repurchase program.

Now moving on to our outlook. For the third fiscal quarter of 2026, we expect revenue in the range of $180 million to $181 million, representing 7% growth at the midpoint, and we expect adjusted EBITDA in the range of $103 million to $104 million, representing a 57% adjusted EBITDA margin. For the full fiscal year, we now expect revenue in the range of $640 million to $646 million, representing 13% growth at the midpoint. And we now expect adjusted EBITDA in the range of $351 million to $357 million, representing a 55% adjusted EBITDA margin.

Our increased outlook is due primarily to the outperformance of our pharma business during the upsell season. We believe this is driven by a couple of factors. First, our client portal continues to positively influence purchasing decisions. In particular, by leveraging the portal, our agency partners have helped broaden our reach amongst SMB customers, contributing to bookings growth in this cohort of roughly 100% year-over-year in Q2.

Second, our multi-module integrated offerings have proven to be a strong fit for the upsell season, as our clients can seamlessly add on to these dynamic programs. These solutions represented over 40% of bookings in Q2, compared to less than 5% of bookings in the same quarter last year.

As more clients adopt these integrated programs, we believe it's led to a smoother and more strategic upsell cycle than in the past. Because these AI optimized programs typically launch in January, customers are able to evaluate results sooner and make incremental buying decisions earlier and more consistently throughout the year.

This has led to a stronger than typical Q2. And as a result, we do not expect as large of a step-up between Q2 and Q3 as we've seen in prior years, when upsells were more condensed and year-end weighted. This dynamic is also reflected in our Q3 growth rate. While quarterly revenue growth may fluctuate as we transition to more integrated programs, we believe these offerings are a meaningful step forward for both our clients and our business.

We believe the longer time on channel, more strategic spending cadence and AI optimization will provide higher returns for our clients and better predictability for our business long-term. We're entering the upfront season with strong client engagement and product momentum.

At the same time, client discussions suggest some uncertainty over how recent policy changes may influence annual budgets, which are expected to be finalized over the next 2 months. As a result, we will continue to take a measured approach to the revenue we have yet to book, which is reflected in our implied Q4 guidance.

On the expense side, we will continue to invest in AI and expect costs related to developing and powering our AI solutions to increase in the back half of the year. We're excited to be able to make these meaningful investments in growing our platform, while still maintaining a 55% plus adjusted EBITDA margin in fiscal 2026.

We believe our AI suite represents a significant long-term growth opportunity for Doximity and we're proud to keep building tools that help physicians save time and provide better care for their patients.

With that, I will turn it over to the operator for questions.

[Operator Instructions] And your first question comes from Brian Peterson with Raymond James.

Sorry, the mute button got me again. Congrats guys on the strong quarter. You mentioned some level of uncertainty around the budget discussions. I'm curious -- is that specifically related to the budget flush end of the year? Or is that more related to budgets next year? And is there anything that you can say qualitatively about where people may be uncertain?

Yes. Thanks for the question, Brian. So as we're talking about a little bit of uncertainty around budgets, we're primarily talking about calendar 2026 budgets, which are going to be released in the next 2 months or so. I think the general environment has just slowed down some of these big decisions like the size of annual budgets, and it could be possible we see a little more caution in the upfront cycle because of this.

I think one of the things that we're talking to our clients about is, there are things in play that could be potential tailwinds for our business, but also things in play that could be potential headwinds. So regardless of where budgets end up, I'll just reemphasize that client engagement with our platform remains very high and especially interest in our integrated programs continues to build really well. So we feel great about our positioning and our ability to continue to outgrow the market regardless of where those budgets end up this upfront season.

Got it. And Jeff, maybe a follow-up for you. Obviously, the product innovation is very clear on what you guys have launched. I'm just curious, as you think about AI and what the opportunity is for Doximity to add value for physicians, how far do you plan on taking that? And as we think about the applications that you may have maybe 5, 10 years from now, is that significantly bigger than what you guys have today?

Thanks, Brian, Jeff here. I appreciate the question. The short answer is we're going to take it all the way. The reality is -- we're really excited that we've grown our AI QAUs 50% this last quarter on quarter and that we tripled our number of scribe users. Scribe is a really sticky product and saves doctors a lot of time. And that whole workflow process of having to document a patient visit, ask questions during that visit, we just think it's a really powerful opportunity that's ahead of us here.

I'll remind you that we had over 1 million newsfeed users this past quarter, and a lot of them are using that as a jumping end point to come and use our DoxGPT to ask additional questions about what might be new in the news. And I'll just say this, we have done now hundreds of side-by-side or head-to-head studies where we've asked physicians on a blinded basis to go look at our product and other products out in the market in this AI venture capital-backed landscape.

And we're winning decisively on the quality of our answers and the depth of our answers. I'm particularly excited to announce on this call that we've added research solutions as a partner, which allows us to get full access for our doctors to virtually every medical journal over 2,000, not just 2 or 3, and I think that is something that doctors really appreciate, the ability to all on one side, without all the library log-ins and everything else to be able to get right to the source, papers and evidence.

So anyway, we're really excited about it, and this is an area where I will personally continue to lean in. And again, the team has had great growth here. We've got roughly 100 people in our development shop working on this. And the team has just been doing really well. I'm very pleased.

Your next question comes from the line of Michael Cherny with Leerink Partners.

Congrats on a really nice quarter. Maybe if I can just dig in a little bit more on the budgeting question against maybe flip it the other way around. I understand that you're trying to be reasonable relative to the fact that these budgets can't be controlled. That being said, in terms of the budgeting process, are you hearing from the clients who you're engaged with about any changes they're thinking about making on allocation. I keep thinking back to every data point we seemingly see about a government that is very hostile towards direct-to-consumer advertising and what that could mean for your ability to further gain share above and beyond what you're already doing. So can you just tell a little bit more about the strategic discussions you're having, given how engaged you are relative to your clients as they go through their budgeting cycle and figure out where to allocate their dollars.

Mike, it's Perry. Just addressing the D2C piece specifically, it's a little bit early in the process. I know the Trump admin has sent out a bunch of warning and cease and desist letters and some brands are making tweaks to their messaging or kind of revisiting their strategy altogether. I think the tough thing for us right now is this time of year, D2C ad dollars are usually controlled by completely different ad agencies than those that control the HCP dollars. It's not always the case, but I understand it's mostly the case.

That said, we can share that we've had conversations with a few of our largest agency partners about how we can court large D2C ad brands about possibly moving some money our way. But it's just too early to kind of understand what the ultimate success will be of that. But I definitely think D2C is one of the many kind of policy uncertainty points that is leading to, I think, a delay in locking in final kind of total budgets for next year.

Your next question comes from the line of Allen Lutz with Bank of America.

I want to stay on the budget flush topic. As we think about the guide for the fiscal third quarter, this calendar fourth quarter and the budget flush expectations, can you talk about what you're seeing so far? Are you seeing a slowdown in budget flush engagements? Is there something different this year versus last year? I know the direct-to-consumer is under some pressure, but is that impacting or bleeding into the HCP market?

Yes. Thanks for the question, Allen. And I just want to take a minute to explain how our transition to more integrated programs have actually helped our clients deploy more of their upsell dollars earlier in the year.

So in prior years, when our clients started their annual programs in the spring, and they didn't have the insights from the client portal, they took a lot more time with their upsell decisions. And that's where we would see a large amount of incremental dollars deployed over the last 2 to 3 months of the calendar year, which you're referring to here as budget flush.

But this year, with our earlier integrated program starts and our client portal insights, we've actually seen our customers have much more conviction in adding on to their programs sooner. So we instead have seen their upsell dollars more evenly deployed over the last 4 to 6 months of the year. So that's what led to a much stronger than typical Q2, but it also makes Q3 a more challenging comparison since upsells that usually occurred later in the year historically were actually pulled forward and distributed more evenly across the back half of the calendar year.

So because of this transition that we're seeing in upsell timing, a better way to look at the health of our business for the upsell season, is to focus on the back half growth rate for calendar 2025, which is up about 14% year-over-year.

And then just finally on that, I just want to add. Like this is a transition that we're really excited about. We believe that by helping lead this change in buying behavior on our platform, it will deliver more consistent value to our customers and better predictability for our business long-term. So the upsell cycle has been really strong for us is totally just a timing component given our newer integrated programs.

And then one for Jeff around the AI strategy more broadly. Can you talk about where you are in the process of building adoption? And how should we think about the timing of future revenue contribution from the AI strategy?

Yes. So the first thing I'll say about AI strategy more broadly is that we are using AI a lot in these integrated programs that Anna had mentioned. So now we're able to just easily optimize the one line item for our clients in these integrated programs that we conduct. 40% of our sales, as Anna said in her prepared remarks, 40% of our sales were integrated programs. These AI optimized programs versus 5% just a year ago.

So I could argue that the biggest financial impact on our business to date has been the ability to optimize on behalf of our clients and have this smoother, more consistent revenue flow for us, but also better ROI results for our clients. So I will share that our portal in terms of number of quarterly active client users is up 3x year-on-year. So we're having more clients logging in every day, every week, checking on how their programs are doing, comparing against their script lift as they call it, their sales results.

And the number of ROI studies we've been able to show them as a result is up over 10x what it was pre portal. And that just allows them, again, to see the value of their investments with us on a monthly basis as opposed to only looking at it once a year in September, which has also led to this, I think, shift in behavior throughout the year because instead of just seeing the ROI in September, I'm able to see it in June, July and August as well, which has been great for us.

All right. So to the end question about integrating our overall workflow suite. As we shared, we're up over 300,000 voice and video calls a day. That is the -- our telehealth platform. That's up from 200,000 last we had announced it. So we're just seeing continued growth in our telehealth. And I will say that is the most natural place for AI integration because as a doctor doing one of those calls, I do want to use AI scribe to help me take notes on it, and it's just literally one tap on the screen to go ahead and start taking notes.

And then, of course, those notes lead to questions about writing the assessment and plan, which we're able to help with DoxGPT. And so we're just in the early innings of that. I think we're proud that we've acquired Pathway. We've integrated and launched that, but we're now just at the start line really in terms of marking that out to our user base. And there's a lot of places in our platform where we see AI fully integrating.

Your next question comes from the line of Ryan Daniels with William Blair.

Congrats on the quarter. One I wanted to ask, Anna, you mentioned, I think, the small medium business was up about 100% year-over-year. And I'm curious how you guys are targeting the agency partners to kind of effectively bring them onto the portal and get those smaller clients because it seems like a nice growth driver.

Ryan, it's Perry. Yes, so the agency partnership program is still going really well. We're up over a dozen partners. They're kind of -- I think a big part of why SMB growth was up over 100%. We kind of gave a similar stat last quarter. They are definitely bringing us new clients, and they're up leveling, I think the business we have with some existing smaller clients. So they've been great.

And we're now, I think, nearing something like high -- we're nearing high 7 figures in business that brought our way. I think where we just annualized kind of the launch of this program. And so we're hoping to continue to scale this. And yes, I think one of the big things that the smaller kind of customers in pharma have found is that with lesser budgets, we basically are able to kind of provide probably tens of thousands of dollars of free value through some of this ROI data, some of this audience creation capabilities.

And so there's almost, in certain cases, more value for them than maybe the average large customer that maybe has the funding to kind of do some of that stuff on their own, even though I'd argue what we have is much better than the kind of internal teams on some of that. So yes, the SMB growth coming from the agency partners has been tremendous, and we're excited about where that program can go.

Okay. Perfect. And then, Anna, a follow-up for you really quickly. I just want to make sure I fully understand this. You said the kind of integrated offerings, the multimodal offerings were 40% of bookings this quarter versus only 5% last year. And then I think you said most of those don't start until 2026. Is that calendar year or -- it must be calendar year because you're in your fiscal year. And wouldn't that effectively increase your visibility. I know you mentioned kind of some uncertainty in the market heading into 2026, but it seems like you're actually having better visibility given that metric. So I'd love to hear any color on that.

Brian, thanks for the question. And just to clarify, when I said that our integrated offerings represented 40% of our bookings, I was referring to our upsell sales in Q2. So those dollars are impacting revenue in Q2 and Q3. It's not actually yet impacting revenue for calendar 2026.

Now I will add, though, we do believe our integrated will continue to lead our sales. So when it comes to the upfront, we theoretically believe integrated will represent a very similar portion of our upfront cycle, which does give us better visibility. It's one of the things we're the most excited about with these programs is they typically start in January. They're often 12 months, and they're just one line item. So it's really easy for our customers to add on to them throughout the upsell season.

So all of those reasons, we believe these programs are better for our business and absolutely better for our clients because it will deliver more consistent returns over a longer period of time.

Your next question comes from the line of Elizabeth Anderson with Evercore ISI.

Congrats on the quarter. Maybe following up on the multimodal question. Is there like -- is there a tipping point that clients say, oh, the multimodal is sort of right for me that pushes -- that sort of gets them over that hump? And then two, like where do you think that can go over the longer term? Like could 100% of your customers beyond that or 50% or 80% -- obviously, more then 50%, but like what I'm saying like where do you see that going over the next couple of years?

Elizabeth, this is Jeff. I'll take that. In short, we think it could grow to be the majority -- the vast majority of our business. If you look at Google PMax and what they're doing, this AI optimization really works. I mean, the results that we're seeing in the return on investment that we're able to show our clients each month are meaningful.

And the great news is they don't have to log in every day and make all sorts of little tweaks. The AI is doing that for them and able to do it at just a much more individual level that no human honestly could do on their own.

So we're excited. We think this integrated program or AI optimized programs will become the vast majority of our business, as you've seen happen in consumer Internet as well.

Got it. And maybe just as a quick follow-up. Sort of how do you think about some of the engagement tools and sort of the ability to -- on the AI side and the ability to sell them more on sort of like an enterprise level to the hospital system sort of like you've done on dialer and some of that. We're sort of early in that -- I assume we're early in that evolution, but could you talk a little bit more about that and sort of your early planning there?

Yes. Thanks, Elizabeth. I'll take that, Jeff here. Yes. So as you know, we work with over 300 health systems on our scheduling and telehealth tools. They represent 45% of all U.S. physicians and our programs with them are for all of their physicians at every hospital. And again, this includes all the top names in medicine.

And yes, a bunch of them have already signed on to our AI suite. We're going through that renewal cycle here this quarter. And we expect to have more to speak about this in terms of numbers, I think, in a quarter or 2. But the short answer is they really like our AI tool set.

And again, we're a trusted partner of theirs for many years now. And we have shown them that we know how to handle HIPAA security, their data well and how to be there managing their privacy of their users.

So more on this front as we move ahead, but I will say we do already have top 20 health systems hospitals who purchased our AI suite, and that's something that they wouldn't do if they weren't comfortable with our handling of what they call PHI, their protected health information as they ask these questions and record these visits.

Your next question comes from the line of Ryan MacDonald with Needham & Company.

Congrats on a great quarter. Just curious if the Trump Rx and sort of most favored nation pricing topics are starting to come up in conversations with your pharma customers. On one end, we kind of look at it as, obviously, pricing comes down, maybe that pressures margins, but it also greatly expands access to more potential customers and consumers over time. So curious if that's having any impact in the conversations around budgets as you're heading into next year?

Yes. Ryan, it's Perry. I'm happy to take this one. So right now, this is -- it's really new. The details are kind of limited. The news just hit today. I mean I think on the surface, it appears to be definitely a net positive for our industry and our business. Access to these GLP-1s are extended to Medicare and Medicaid patients funded by the government.

I think taking a step back, it's great for health care in general, cutting out more of the middlemen and all the markups, it's kind of a hard win for health care. And there's some downstream positive impacts for American patients to the extent that it helps reduce the downstream health disorders associated with obesity.

But in terms of how it's going to affect upfronts right now, it's just -- it's really, really recent. So not much we can comment on right there.

Okay. And then maybe just as a follow-up as you're getting into upfront season. It's great to see sort of the continued growth in users on your workflow tools I'm just curious what sort of magnitude of impact you've seen from specifically Pathway as it's been integrated in? And how leverageable is that in your view as you kind of go into those discussions on upfront ahead of next year?

This is Jeff. I'll take that. So Pathway, we are not trying to actively sell or monetize in the marketplace yet. I think that's the benefit that we have with $91 million in operating cash flow this quarter that we can afford to invest for the longer term and make sure we focus on the physician experience here first.

So nothing really meaningful to report on that front yet. But I can tell you there is a lot of client interest. I will say I'm surprised that how a lot of VC cash can create buzz for banner ads again, even though our clients, of course, know that banner ads generally don't work since doctors don't pay much attention to them and they're, frankly, somewhat bearish.

But from our end, I will say the thing that we're most excited about with the Pathway acquisition is that integrated drug reference, which is a really key thing, I think, for physicians using AI. And as we said in our remarks, we believe we're unique in the market and having this natural language way of asking drug-related questions that doesn't require any LLM that allows you to make sure you have peer-reviewed fact-checked answers because others out there do have issues with that.

And anyone who tells you they don't have any hallucinations, well, they're hallucinating themselves. The reality is that it's just not how LLMs work. And from our end, we're really proud to be able to use the Pathway acquisition to provide accurate fast answers to drug questions, which are the most frequent questions that doctors have.

Your next question comes from the line of Steven Valiquette with Mizuho Securities.

Congrats on the strong results. One of the questions I had, you just sort of half answered, but I'll -- I really just got kind of a multipronged question. First, just on the Doximity litigation with Open Evidence. My sense is you're probably not too worried about it, otherwise, it would not have really made sense to acquire Pathway since they were also being sued at the same time with your deal back in August. Really, my question is, first of all, did this ongoing litigation have any impact on your purchase price of pathway, which still seems like a very attractive price from the Doximity perspective.

And then also with Open Evidence, this is the part you kind of half answered, but they -- in their own press releases, they talk -- they tout their kind of lock on the historical medical information and content from New England Journal of Medicine and from JAMA. I'm wondering if that's a competitive disadvantage for your offering? Or is that something you think you may be able to circumnavigate in some way?

Yes. Thanks for the question, Steven. We're not going to necessarily comment on ongoing litigation. But what I will say from the Pathway acquisition perspective is we did a ton of benchmarking, and we feel as though we got a very reasonable valuation there. And we paid for the best people in the industry, it's a 6-person team and they have built a corpus of medical knowledge that was second to none. And so we're really happy with the way the acquisition has nicely folded in with Doximity as well.

The speed to be able to integrate Pathway into DoxGPT and have it up and running, working for physicians and having all of these medical journals and licensing has been a game changer for us. So we're super excited by the acquisition of Pathway, and we think it's propelled us forward in the AI space.

Yes. This is Jeff. I'll just chime in. Doctors want to be able to access all of the journals, right, not just 2 or 3 of them. So we're excited about our research solutions partnership and the ability to give doctors exactly that, all the top generals, full PDF access, again, over 2,000.

Your next question comes from the line of Craig Hettenbach with Morgan Stanley.

So with AI evolving at such a fast pace, it's great to see that, that quick integration of Pathway. Jeff, how are you thinking about just organic investment here as well as other tuck-ins as you continue to expand capabilities on the platform?

Short answer is we'll continue to look at both. Again, I'm proud of our team here and what we've built, but of course, we're happy with the Pathway acquisition as well. So we'll continue to keep eyes open for both. And in the end, our goal is to deliver the best end product for physicians, which I think our 50% growth in quarterly active users in AI is showing we're doing well.

Got it. And then just switching gears on the video module front. How are you thinking about kind of additional video content and just the runway for growth that you're seeing for those products?

That's a part of the AI question because, of course, the ability to create AI short-form videos is something we hope will be a real unlock for our clients because we do have a lot of video inventory in our newsfeed and in our telehealth workflow services. And we do see that it does perform very well. I mean all else equal, the ability to show molecular diagram, a chart, it really is a faster, easier way to learn. So we're excited to get more video content on our platform, and it's continued to perform very well for us.

Your next question comes from the line of Jessica Tassan with Piper Sandler.

This is actually Derek Gross on for Jess Tassan. Could you tell us what your market share is in clinical reference? And would you characterize DoxGPT as focused on any particular specialty or type of medicine, for example, focus on drug interaction, physical medicine or oncology? Or is it more broad-based? And then what are the input sources that Pathway can ingest? Does it have the ability to review patient-specific records or cases?

Yes, this is Jeff, I'll take that. We don't know our market share in clinical reference. I'm not certain anyone really does I can tell you the leader by far is a publisher that's been in the market for over 25 years. And we have a lot of respect for that player. And candidly, I think we are taking appropriate cautions again to make sure that we have active answers as we come here.

And again, we're very proud that our integrated drug reference gives fully accurate peer-reviewed, physician-reviewed answers to really the most important questions in medicine. Of course, this does harken back to my Epocrates background, which was a company I founded back in my dorm room in 2000 and worked at for 10 years.

I can tell you the clinical reference base is an important space for us, but it's one we're fairly new in, but we're excited to lean into it and as I said in response to one of our earlier questions, our plan is to win this one, and lean in all the way. We're excited about what AI really enables doctors to do, which it didn't do before, which is the ability to just pull up their phone where they already have our app and ask national language questions and get peer-reviewed answers.

Your next question comes from the line of Brian Tanquilut with Jefferies.

Congrats on the quarter. Just as I think of your current suite of tools that you offer to physicians, how much runway left do you think is there in terms of monetizing that physician attention? Or maybe ask differently, is the battle now just still winning contracts? Or is it to fill up that space in pharma ads? I mean, how should we be thinking about kind of like what inning we're in here?

Yes, this is Jeff. I'll take that. So first, I'll say that we're pacing ahead of last year in terms of our new contract activity in the month of October. So we continue to see good growth in the business. And at the end of the day, as we said in our S-1 a few years back, it all comes back to what is the return on investment for our clients.

And as I said a moment ago, we're excited that we were able to show over 10x as many ROI studies for our clients. And let's just say that they're getting many times their money back in what they invest with us. The good news for us is we don't need to go get that many brand-new clients to continue to grow with an NRR of 118%, right? So obviously, our clients are still coming -- spending more with us, right?

Our same-store sales are up 18% year-on-year. And again, with the ROIs that we're showing our clients, we still believe we're in the early innings here.

Your next question comes from the line of Stan Berenshteyn with Wells Fargo Securities.

You called out increasing investment in the back half of the year. How should we think about R&D expenses I guess beyond this year? Do you expect a more meaningful acceleration as you're working on these AI tools?

Yes. Thanks for the question, Stan. I'll say it's too soon to give longer-term guidance on expenses and investments. Like right now, we're still learning how much investment we'll need to build and power AI solutions. But at the same time, we're also learning how much savings we'll have as a company associated with our own internal AI initiatives.

And the other comment I'll make on the back half investments, the ramp we're seeing today pertains to being in the launch phase for a lot of these AI products. So we're spending on getting the solutions built and powered and marketed.

And so I'd imagine the spend curve here plateaus as scale efficiencies kick in over time. So I would not necessarily look at the expense growth that we've seen in the back half of the year and carry that forward. I think like many other parts of our business like we will first launch telehealth, we do see an expense boost at first. And then over time, that will plateau and we'll continue to have savings on the AI side.

So when it comes to margins, there's no reason for us to believe even with these investments, margins will look materially different from where they are today at over 55% for the year.

Got it. Helpful. And then one quick one. On the modules that represented 40% of bookings. Can you just remind us specifically what these modules are?

This is Jeff. It's really not the modules that are 40% of bookings. It's the integrated programs, which are the AI optimized programs, which allows us to go and optimize which modules are used for each client, for each product. So being able to seamlessly transition between a news article and a video card or in our scheduling channel versus our telehealth channel versus our newsfeed channel.

So again, being able to optimize that on our end, it's sort of like Google PMax, if you've heard of that. It's the ability to have our clients have to do less of that sort of shifting and optimization ourselves, we're able to orchestrate it for them. And again, we've seen that we're able to deliver really strong results by having that greater level of trust and control from our clients.

Your next question comes from the line of Scott Schoenhaus with KeyBanc.

Congrats on the quarter, and I apologize if this was already asked. But it seems like you took more market share this quarter than the industry. Typically, you say you can take double the market share, but it seems you outperform that stat. Is that true? What was driving that? Was it more on the self-service portal you see outsized growth? And then in the context of your back half guidance, how are you contemplating the market share dynamics versus the industry?

Yes. Thanks for the question, Scott. I mean when it comes to our business, because our clients think about their budgets from an annual perspective, the best way to think about the health of our business is on an annual basis. So if we look at calendar year 2025 growth rate, we grew about 15%, which is a little over 2x the market growth rate.

Our best estimate to start the year was that the market would grow about 5% to 7%. We think things have been marginally better, so maybe closer to that 7%. So we have continued to grow at 2x the market growth rate for the year.

I wouldn't take any one quarter and make an assumption based on that quarter, especially as we're seeing this transition towards more integrated programs, which have smoothed out our upsell cycle quite a bit.

As we look out to next year, we have no reason to believe that market growth rate isn't somewhat similar. But one of the great things over the last 2 years is we've seen a lot of stability in our customers' budget growth. Like it comes in within a range, and there are certainly puts and takes on that range. As we've talked about, there's certainly potential tailwinds and some potential headwinds. But we feel great about our competitive position. And as Jeff mentioned, we're already pacing ahead of last year's upfront. So we believe that we can continue to grow at that 2x market rate as we've shown over the last 5 to 7 years or so.

Your next question comes from the line of David Roman with Goldman Sachs.

You answered in a prior question on the diversification of growth drivers on AI within the provider space. But could you maybe go into a little bit more detail about the contribution that health systems are having to the growth rate and how you see that opportunity unfolding on a go-forward basis?

Yes. Thanks for the question, David. And so while our pharma business does continue to lead our growth, we've definitely seen some strength in our health system business, particularly in 2 areas, one being our enterprise offering and the other being our recruiting solution.

So our enterprise business is actually one of our fastest-growing businesses at Doximity, and we're seeing a lot of really strong paid adoption of our on-call scheduling tool. And as Jeff mentioned earlier, we have a whole another vector here to add on our AI tools as well and package that with our on-call scheduling and our telehealth tools and sell them to enterprises. So we believe we have a long room for growth there.

On the recruiting business, we've had a strong year so far. You can see that in other revenue broken out in our 10-Q. It's primarily curative. That's about 25% year-over-year in Q2. So we're also seeing strength on the recruiting side. So we're really encouraged that despite the budget challenges that these health systems are facing in this environment, they continue to come to Doximity. And we think that health systems can absolutely be a long-term growth driver for us.

And maybe even thinking beyond health systems. I mean, I think we all appreciate why there's such a significant focus on the biopharma side. But as we're starting to see companies in the medical device industry, for example, starting to focus a lot more on direct-to-consumer advertising and bridging more into the PCP channel. To what extent does that become an incremental growth driver as you look forward that may help offset some of the volatility that may continue to occur on policy-related changes in pharma budgets.

David, it's Perry. Yes, medical devices is an interesting one. It's one where we've always had some focus. It's on a relative basis, a lot smaller than pharma and some of these health system opportunities. But we do have a consistent presence there. That is a space that is kind of hard to believe is probably even further behind in terms of adoption of digital and pharma.

We have some significant clients there. We are focused on it, but I wouldn't say that it's the type of opportunity that right now is going to be a significant contributor to growth, but definitely one that we're focused on and have a consistent presence in.

Your next question comes from the line of Eric Percher with Nephron Research.

I appreciate you've been talking about the change in purchasing patterns for over a year. And I think you've trained us to expect that budgets are more disciplined. I wanted to ask, as you saw that change, has it been over what we heard a lot about last year, has it been over multiple years?

And is it uniform at this point across your 121 accounts above $500,000? Or are we seeing that there are some that are getting discipline versus flush this year and that weighs on Q4, but maybe helps next year.

Yes. Thanks for the question, Eric. So we have started selling these integrated programs at scale, I would say, last Q3, so our last annual upfront buying season. And we definitely saw a lot of traction and we've now seen continued traction.

We started at first with more of our largest clients. So it's a great fit last upfront season for our top 20 clients because they're already buying a lot on Doximity and they're comfortable committing to longer on channel and more consistent spend.

Now though we are seeing more interest in mid-tier and SMB to get into these programs, which we think is a great indication that the health of our business is broad-based. As we mentioned on the prepared remarks, we had 100% growth in our SMB business.

And so we're seeing a lot more customers lean into these integrated programs and be willing to commit to longer on channel and more even spending cadence because the optimization provides stronger returns. The customers love that they're just buying one line item of Doximity, and we're optimizing for them across the newsfeed and across workflow and maybe one day across AI, and our customers love that we're doing the work there, and we're giving them stronger returns because of it.

So we definitely believe we're going to continue to see that traction there even amongst the smaller customers.

And what follows is the portal side of things? Is there an acceleration from the portal that slows? Or are you still ramping on that benefit?

Yes, Eric, it's Perry. So the portal is doing great. I think Jeff alluded to it earlier. But -- when you look at the number of brand and agency users and how that compares with last year, it's more than tripled. So not only do we have all the brands on -- or the vast majority of the brands on now, but they're kind of coming in more and more often and getting, I think, a lot of value out of the solution.

So I think there's still room to go there. The portal continues to increase sales productivity, improved conversion rates lead to faster upsells. And it improves our ability to respond to pricing push faster. And all brands continue to benefit from seeing ROI much more often and Jeff alluded to that as well.

But when you're talking about more than 10x increase in the amount of these studies we're putting out. So more and more brands seeing data points more and more often. That is a big influence, I think, on the proclivity to kind of come back and give us more money and to kind of get us that money back faster.

So I think even though we don't talk about the portal as much in the prepared remarks anymore, there's still a lot of work going on there. There's still a lot of opportunity. So we're very happy with the progress we've made to date.

Your next question comes from the line of David Larsen with BTIG.

This is Jenny Shen on for David. Congrats on the quarter. I was wondering if you could just speak more about your relationship and your technologies relationship with some of the large pharma CRMs like Veeva and Salesforce IQVIA. Does the new portal and your solutions kind of integrate into them? Do they complement each other? Or are you more competitors?

This is Jeff. I'll take that. I think it's complementary. We've worked with Veeva for years and have a good relationship with them and continue to work with them a lot. We don't work with Salesforce as much. Frankly, they just don't have many clients in this space. But yes, we continue to work well with Veeva.

And no, I think what we're doing is really completely different. We're in our portal able to show what happens on the digital marketing side. And of course, Veeva has historically focused more on in-person sales. And increasingly, those are 2 kind of separate groups as more and more doctors become what they call no-see physicians or don't see reps.

Your next question comes from the line of Jailendra Singh with Truist Securities.

This is Jenny Cao on for Jailendra. I just wanted to build on the competitive landscape conversation earlier. So as we're seeing more players enter the HCP engagement space, not just open evidence, but others each with their own base of physicians and their way of engaging. At the same time, we know pharma shift to DTC from DTC to HCP could expand the pie, but it just feels like a lot of competition for physician mind share is intensified.

Just curious how you see the competitive landscape evolving as more platforms target HCP marketing budgets?

Yes. Thanks for the question. I think I'll just point back to our results. As our results clearly show, we continue to gain share nicely within the digital HCP market. We've had another year of growing at about 2x the market growth rate. I think what's unique about Doximity is we do offer a unique suite of native solutions to our customers, that's delivering industry-leading ROI.

We've seen clients experiment with alternatives in the past like programmatic or display media. History has shown that over time, our clients consistently lean into where the ROI is, and given Doximity's large feature-rich platform, the record engagement levels that we're seeing, and the exciting advancements in our own AI suite, which we believe we're really well positioned to continue to deliver best-in-class ROI for our customers, and that's going to, in turn, allow us to continue to outgrow the market rate.

Ladies and gentlemen, that does conclude our question-and-answer session. I will now turn the conference back over to Jeff for closing comments.

I'd like to thank -- I'd like to end by again thanking the entire Doximity team for working so hard and so efficiently to serve more doctors than ever before. Thank you, everyone, for joining.

Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation. You may now disconnect.