Doximity’s Earnings Call: Strong Growth and AI Focus

Doximity, Inc. ((DOCS)) has held its Q2 earnings call. Read on for the main highlights of the call.

Doximity’s recent earnings call painted a picture of robust financial health and strategic growth, underscored by impressive revenue figures and a strong embrace of AI technologies. Despite facing some uncertainties regarding future budgets and increased investment costs, the company’s successful integration of Pathway and continued client engagement signal a strong market position.

Record Revenue and Growth

Doximity reported a record $169 million in revenue for the second quarter of fiscal 2026, marking a 23% increase year-on-year and surpassing the high end of their guidance by 7%. This significant growth highlights the company’s ability to exceed expectations and strengthen its financial standing.

Strong Financial Performance

The company’s adjusted EBITDA margin reached 60%, translating to $101 million, which was 15% above their guidance. This represents a 32% year-on-year growth, with free cash flow increasing by 37%. These figures underscore Doximity’s strong financial performance and operational efficiency.

AI and Workflow Tool Adoption

Doximity’s AI tools have seen a substantial increase in usage, with quarterly active prescribers up more than 50% from the previous quarter. The new AI scribe tool also saw its user base nearly triple compared to Q1, demonstrating the company’s successful integration of AI into its offerings.

Successful Pathway Acquisition Integration

The acquisition of Pathway has been seamlessly integrated, with its entire medical data set and AI models incorporated into DoxGPT just seven weeks post-acquisition. This rapid integration has enhanced Doximity’s AI capabilities, positioning it as a leader in medical AI solutions.

Client Engagement and Expansion

Doximity’s net revenue retention rate stands at 118%, with 121 customers contributing at least $500,000 each, up 16% from the previous year. The company also reported a 100% year-over-year increase in bookings growth among SMB customers in Q2, highlighting strong client engagement and expansion.

Budget Uncertainty

There is some uncertainty surrounding the calendar 2026 budgets due to potential policy changes, which could impact the annual budget finalization over the next two months. This uncertainty poses a challenge for future financial planning.

Transition in Upsell Timing

Doximity is experiencing a shift towards more integrated programs, leading to a change in upsell timing. This resulted in a stronger than typical Q2 but presents a challenging comparison for Q3.

Increased AI Investment Costs

The company anticipates increased investment in AI and related costs in the latter half of the year. However, these costs are expected to plateau over time, reflecting Doximity’s commitment to enhancing its AI capabilities.

Forward-Looking Guidance

Looking ahead, Doximity expects revenue for the upcoming fiscal third quarter to be between $180 million and $181 million, representing 7% growth at the midpoint. The adjusted EBITDA is projected between $103 million and $104 million, with a 57% margin. For the full fiscal year, revenue is expected to range between $640 million and $646 million, with a 13% growth at the midpoint and an adjusted EBITDA margin of 55%. The company’s optimistic outlook is largely driven by the success of their pharma business and integrated program adoption.

In conclusion, Doximity’s earnings call highlighted a period of strong financial performance and strategic growth, driven by record revenue, robust client engagement, and successful AI integration. While there are some uncertainties regarding future budgets and increased investment costs, the company’s forward-looking guidance remains positive, underscoring its strong market position and growth potential.