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Doximity Sets 10% Revenue Growth Goal for 2026, Bolstered by Accelerating AI Investments

Earnings Call Insights: Doximity (DOCS) Q4 2025

Management View

• Jeff Tangney, the CEO, stated that the company’s revenue for the fourth quarter was $138 million, which he characterized as being “4% higher than the upper limit of our projected range.” Additionally, he mentioned that the annual revenue stood at $570 million, marking a 20% growth from the previous year. Tangney emphasized that their largest 20 customers, who have been consistent indicators of performance, experienced the most significant growth rate of 23% in the fiscal year 2025.
• Tangney highlighted the firm’s adjusted EBITDA margin at 50%, amounting to $70 million, for the fourth quarter and noted a figure of 55%, totaling $314 million, for the entire year. She mentioned that the free cash flow stood at $97 million for the quarter, marking a rise of 56% compared to the previous year, and reached $267 million annually, which is an increase of 50% from the prior year.
• Tangney reported that user engagement reached unprecedented levels with “record-high numbers of unique active users across quarterly, monthly, weekly, and daily metrics in Q4.” The focus was particularly on the performance of their newsfeed and AI tools which he highlighted as major contributors to this success: “The number of unique individuals using our newsfeed set new records during the previous quarter, and we saw an increase of over 30% year-over-year for both reads and taps on our articles. Additionally, our suite of AI tools experienced the most rapid expansion once again last quarter, growing more than fivefold compared to the same period the prior year.”
• The CEO highlighted a personal change in strategy: “After our physician summit last month, I’ve decided to redirect my attention from our client portal to our clinical AI offerings.”
• Anna Bryson, Chief Financial Officer, announced, “Revenue for the fourth quarter climbed to $138.3 million, marking an increase of 17% compared to last year’s figures and surpassing the upper limit we anticipated.” According to Bryson, part of the positive outlook for fiscal 2025 can be credited to their move towards offering more comprehensive packages with multiple modules, which has led to bigger deals as well as additional programs starting in January. Additionally, she noted a net revenue retention rate of 119%, alongside having 116 clients who generated at least $500,000 annually through subscriptions—a rise from 99 such clients over the previous year.
• Bryson detailed, “Non-GAAP gross margin in the fourth quarter was 91%, flat versus the prior year period. For the full fiscal year, non-GAAP gross margin was 92%.” She noted free cash flow of $97 million for Q4 and a year-end cash position of $916 million. Share repurchases totaled $26.8 million in Q4 and $116.2 million for the year.

Outlook

• For the initial fiscal quarter of 2026, Bryson anticipates revenues ranging from $139 million to $140 million with an adjusted EBITDA forecasted between $71 million and $72 million. Over the entire fiscal year, they project revenues falling within $619 million to $631 million, marking a 10% increase at the mid-point estimate, alongside an expected adjusted EBITDA of $333 million to $345 million.
• She stated, “The Fiscal Year 2025 benefited from serving as the transitional period, resulting in a slight increase in revenue. However, this makes the year-over-year comparison more challenging for Fiscal Year 2026, which is why we anticipate a lower projected revenue growth rate.”
• Bryson stressed, “For now, we’ve secured slightly less than 70% of our projected subscription-based revenue for this year through signed contracts.”
• The firm predicts that the pharmaceutical healthcare professional (HCP) digital market will expand by approximately 5% to 7% for this year and forecasts its pharma division to “increase at about double the pace of the market,” continuing as their quickest expanding sector in fiscal 2026.

Financial Results

• Doximity announced a fourth-quarter revenue of $138.3 million, marking a 17% rise compared to the previous year. For the entire year, their revenue amounted to $570.4 million, which represents a 20% growth from the prior year.
• In the fourth quarter, Adjusted EBITDA reached $69.7 million, reflecting a margin of 50%. Over the entire year, Adjusted EBITDA amounted to $313.8 million, with a margin of 55%.
• The free cash flow amounted to $97 million for the fourth quarter and reached $266.7 million for the entire year. By the end of the period, the company held $916 million in cash, cash equivalents, and marketable securities.
• In the fourth quarter, the firm bought back $26.8 million worth of shares, bringing the annual total to $116.2 million under the ongoing share repurchase initiative, leaving $424 million still available in the present program.

Q&A

• Brian Peterson from Raymond James inquired about broader economic influences and how they affect customer expenditures. In response, Tangney stated, “So far, we haven’t observed indications of a market downturn. However, considering the significant regulatory ambiguity, we’re anticipating one.” He characterized his clientele’s sentiment as being “guardedly positive,” emphasizing their keen interest in artificial intelligence technologies.
• Michael Cherny from Leerink Partners brought up concerns about short-term slowdowns driven by broader economic factors. Bryson responded, “Our additional sales might fluctuate…thus, the key element moving forward for the coming year will hinge on how our clients’ financial resources shape up.”
• Elizabeth Anderson from Evercore ISI questioned the underlying assumptions regarding physician recruitment and point-of-care strategies. Bryson commented, “The pharma sector continues to be our quickest expanding division… we’ve observed a slight upturn in our health systems segment over the past six to nine months.”
• Ryan MacDonald from Needham inquired about how early integrated program launches affect seasonal fluctuations. Bryson responded, “We initiated numerous such programs in January… they ought to, over time, result in a more stable and regular revenue pattern for our company throughout the years.”
• William Blair, Jared Haase, asked about increases in market share and reallocations within the budget. Tangney responded, “So far, we haven’t observed any indications that the pace of market expansion is decelerating… I believe we’re capturing a larger portion of this market from various competitors.”

Sentiment Analysis

• Experts focused on broad economic uncertainties, seasonal trends, and the effects of artificial intelligence, adopting a somewhat wary stance yet also recognizing the firm’s favorable outcomes.
• The management kept an optimistic tone throughout their pre-prepared statements and during the question-and-answer session, often employing phrases such as “excited,” “proud,” and “strong.” However, they also showed caution when discussing forecasts and broader economic conditions. Bryson highlighted, “Once more, we’re feeling quite positive about steering towards another consecutive year with over 50% adjusted EBITDA margins.”
• In comparison to the prior quarter, management maintained an upbeat stance yet expressed greater explicit caution about broad economic uncertainties and fluctuations in additional sales.

Quarter-over-Quarter Comparison

• The firm saw a decrease in Q4 revenues ($138.3 million) from Q3 figures ($168.6 million). This drop follows seasonal patterns and can be attributed to previously mentioned timing issues regarding program releases.
• The forecasted growth rate for fiscal 2026 projects a decrease to around 10%, compared with the 20% reported for fiscal year 2025, due primarily to the integration effects following new program rollouts in January.
• The management kept emphasizing strong net revenue retention and expansion among key customers, placing extra focus on capturing more market shares and increasing investments in artificial intelligence during this quarter.
• The attention of analysts moved away from newly launched products to broader risk factors and the viability of sustained growth.

Risks and Concerns

• Management recognized “significant policy unpredictability” along with the inconsistency of additional sales pitches as major concerns.
• Bryson stated, “So far, we haven’t noticed any effects on our operations due to the current broad economic instability. We think it’s wise to consider the possibility that market expansion might fall at the slower end of anticipated levels.”
• Experts were asked about large-scale economic shifts, fluctuations in budgets, and the dangers tied to healthcare organizations’ vulnerability to policy alterations.

Final Takeaway

In the fourth quarter and throughout the entire year, Doximity reported strong increases in both revenue and profit margins, thanks to active user participation across their digital and artificial intelligence-enhanced services. The firm has redirected its strategy towards comprehensive solutions integrating multiple modules along with advancements in AI technology, which facilitated bigger contracts and increased customer loyalty. Leadership forecasted an expected 10% rise in revenues for fiscal 2026 but noted challenges such as more challenging comparisons from previous years and cautious economic conditions; nonetheless, they remain hopeful regarding further market capture and enduring benefits from ongoing AI initiatives. This forward-looking statement emphasizes prioritizing operational efficiency, retaining clients, and addressing regulatory changes within the pharmaceutical industry’s digitized environment.

Read the full Earnings Call Transcript