Q4 2023 Doximity Inc Earnings Call
Speaker 1: all of the top 20 hospitals and all of the top 20 pharmaceutical companies.
Speaker 1: Our interactive platform allows them to connect efficiently with the right positions about new treatments and patient referrals, each of which can be worth thousands of dollars per patient. We then measure our clients' return on investment, or ROI, using third-party claims and prescription data. Our median client ROI is a 10 to 1 return or better, which guides our pricing and fuels our profitability.
Speaker 1: Speaking of which, our bottom line was also strong in Q4, with an adjusted EBITDA margin of 44%, or $49 million, which was 6% above the high end of our guidance. Our free cash flow was similarly strong at $46 million.
Speaker 1: For the full fiscal year, our EBITDA margin was 44%, or $184 million. During the year, our cash balance grew to a record $841 million, while we made two new major cash investments. First, we invested $54 million in cash, plus up to $24 million in future earnouts.
Speaker 1: to buy Amion.com, a SaaS physician scheduling company. And second, we bought $86 million of our own stock at an average price of $32.16 per share. Long term, we feel good about both of these investments. Buybacks reduced our shares outstanding by about 1% this year.
Speaker 1: And as we've integrated AmIIN's 200,000 physician schedules into our productivity suite, it has become a cornerstone of our daily engagement alongside our dialer telephony service. In short, we're increasingly the way doctors call patients from their EHRs and call colleagues from their on-call schedules.
Speaker 1: Looking ahead, our revenue guidance for next year is $500 million to $506 million, which is 20% growth at our midpoint of $503 million. In terms of visibility, over 65% of our subscription revenue guide is already under contract, which is more than we typically had at this time of year.
Speaker 1: We're prepared for another tough upsell year as we expect macro belt tightening to continue.
Speaker 1: Our adjusted EBITDA guidance for the year is $219 million at the midpoint, which continues the 44% margins we had last year.
Speaker 1: In all, despite macro headwinds, we expect to grow both our top and bottom line by roughly 20% this year.
Speaker 1: Okay, turning now to our network growth.
Speaker 1: Our usage hit fresh hot in Q4. Across our entire platform, we achieved a record number of quarterly active users. As pandemic emergency provisions officially ended, we're proud to emerge with a record number of providers using our Physician Cloud in Q4 to power their scheduling, fax, and other services.
Speaker 1: e-signature, and telehealth needs.
Speaker 1: Our telehealth tools alone were used by a record 380,000 unique providers.
Speaker 1: Our enterprise products help hospital providers streamline workflows and spend more time caring for their patients.
Speaker 1: To that end, today we announced a new integration with Meditech, the third most widely used electronic health record, or EHR, in the United States. Our workforce tools now integrate with all of the top three EHRs, namely Epic, Cerner, and Meditech, who collectively comprise 85% of the hospital market by beds.
Speaker 1: per class research.
Speaker 1: Alongside our EHR partners, we're excited to continue digitizing the many paper-based and legacy workloads that physicians face today. As a product-led software company, we will continue to invest and grow our business while always keeping physicians first.
Speaker 1: By connecting doctors in their daily work, from finding which cardiologist is on call, to viewing their profile, to calling or messaging them, we believe we become the physician cloud, a workflow and communications hub whose usage is more analogous to a Bloomberg than a LinkedIn. Speaking of communications,
Speaker 1: Our new docsgpt.com AI medical writing site has proven a hit in helping doctors draft and seamlessly fax, yes fax, insurers the many varied approval others needed to get care for their patients.
Speaker 1: There's an old phrase in medical training, if it's not documented, it's not done. Well, we're glad to help doctors reduce the nearly half of their day per an AMA time tracking study that they spend on paperwork. As a department chief from a top five hospital put it to us in an email, Doc's GPT is quote,
Speaker 1: Pretty badass." DocsGPT has grown steadily via word of mouth to now serve thousands and thousands of clinician prompts each week. Doctors are sharing their most useful prompts with one another and grading responses on utility and clinical accuracy. This continuous feedback is helping us prioritize our roadmap and identify where AI can help doctors most.
Speaker 1: Okay, turning now to our new hire updates. Today we are thrilled to announce two new additions to our senior leadership team, Craig Overpeck and Ben Greenberg.
Speaker 1: Craig joins us as a Senior Vice President of Commercial Operations and brings a wealth of industry knowledge and experience.
Speaker 1: Craig served as the US COO at M3, the Japanese physician network, for over a decade. During that time, M3 grew its revenue from around $50 million to $700 million.
Speaker 1: Ben also brings decades of industry experience and joins us as Senior Vice President of Commercial Products. Ben spent more than 11 years at WebMD Medscape where he served as the VP of Product and headed their mobile products.
Speaker 1: You'll have an opportunity to hear directly from both Craig and Ben at our upcoming Investor Day on June 6th, which will broadcast live from the New York Stock Exchange.
Speaker 1: Speaking of which, we are excited to host our inaugural investor day next month. It's been nearly two years since our IPO and we're excited to demo our latest products, hear from a panel of physician technology experts, and discuss our longer term model. We'll have lunch and live demos after our presentation for those who can attend live at the New York Stock Exchange.
Speaker 1: We look forward to seeing many of you in person in just a few short weeks.
Speaker 1: Okay, I'd like to end by thanking our nearly 1,000 Doximity team members who continue to work incredibly hard to realize our mission to make doctors more productive.
Speaker 1: With consecutive quarters of record provider engagement across our entire platform...
Speaker 1: I personally have never been more excited about what we're building, and I'm proud to be on this journey with you all.
Speaker 1: And with that, I'll hand it over to our CFO , Anna Bryson, to discuss our financials and guidance. Anna?
Speaker 2: Thanks, Jeff, and thanks to everyone on the call today.
Speaker 2: We are proud to have achieved another year as a Rule of 60 Plus company in fiscal 2023.
Speaker 2: Fourth quarter revenue grew to $111 million, up 18% year over year and exceeding the high end of our guidance range.
Speaker 2: Of note, our subscription revenue, which comprises 93% of our total revenue, saw growth reaccelerate to 20% in Q4, up from 18% in Q3.
Speaker 2: While the macro environment remains uncertain, we are encouraged to see this positive momentum in our core marketing business.
Speaker 2: Full year revenue grew to $419.1 million, a 22% increase year over year.
Speaker 2: Similar to prior years, our existing customers continue to lead our growth.
Speaker 2: We finished the year with a net revenue retention rate of 117%.
Speaker 2: For our top 20 customers, net revenue retention was higher at 124%.
Speaker 2: We ended the year with 294 customers contributing at least $100,000 each in subscription-based revenue.
Speaker 2: This is a 16% increase from the 254 customers we had in this cohort a year ago, and these customers accounted for 87% of our total revenue for the year.
Speaker 2: Additionally, our customers with the largest budgets continue to scale up quickly on our platform.
Speaker 2: We ended the year with 11 customers contributing more than $10 million each in revenue.
Speaker 2: This is up significantly from the two eight-figure customers we had just two years ago.
Speaker 2: These 11 customers are all top 20 pharmaceutical manufacturers and purchase across an average of over 15 brands each.
Speaker 2: As a reminder, no customer represents 10% or more of our revenue, and no individual brand represents 2% or more of our revenue.
Speaker 2: Turning to our profitability, non-GAAP gross margin in the fourth quarter was 90%, flat versus the prior year period.
Speaker 2: For the full fiscal year, non-gap gross margin was also 90% and flat with fiscal 2022.
Speaker 2: Adjusted EBITDA for the fourth quarter was $48.9 million and adjusted EBITDA margin was 44%.
Speaker 2: compared to $39.4 million and a 42% margin in the prior year period.
Speaker 2: For the full fiscal year, adjusted EBITDA was $184 million, growing 22% year over year.
Speaker 2: Full year adjusted EBITDA margin was 44% and flat with fiscal 2022.
Speaker 2: Now, turning to our balance sheet, cash flow, and an update on our share repurchase program.
Speaker 2: We ended the fiscal year with $841 million of cash, cash equivalents, and marketable securities.
Speaker 2: In Q4, we repurchased $16 million worth of shares at an average price of $30.59.
Speaker 2: For the full fiscal year, we repurchased $86 million worth of shares at an average price of $32.16.
Speaker 2: We generated free cash flow in the fourth quarter of $45.6 million compared to $44.9 million in the prior year period.
Speaker 2: For the full fiscal year, we generated free cash flow of $173.4 million compared to $120.9 million in fiscal 2022, an increase of 43% year over year.
Speaker 2: year, we generated free cash flow of $173.4 million compared to $120.9 million in fiscal 2022, an increase of 43% year over year. Now moving on to our outlook.
Speaker 2: For the first fiscal quarter of 2024, we expect revenue in the range of $106.5 to $107.5 million, representing 18% growth at the midpoint.
Speaker 2: And we expect adjusted EBITDA in the range of 39 to 40 million, representing a 37% adjusted EBITDA margin.
Speaker 2: For the full fiscal year, we expect revenue in the range of $500 to $506 million, representing 20% growth at the midpoint.
Speaker 2: And we expect adjusted EBITDA in the range of $216 to $222 million, representing a 44% adjusted EBITDA margin.
Speaker 2: As of today, we have over 65 percent of our annual subscription-based revenue guidance under contract. Unfortunately, for the year past, thebeam network has done too much to get enough all
Speaker 2: We expect another 30 percent to come from renewals and upsells, and the remaining 5 percent to come from new customers.
Speaker 2: To break down the renewal and upsell component further, given the continued macro uncertainty, we are modeling a similar percentage of mid-year upsell to last year, which is about half of our historical rate. Thank you for listening.
Speaker 2: Over the last few years, there have been many shifts in our customers buying and launching behavior.
Speaker 2: The rapid move to digital, the macro downturn, and the launch of new products has led to some changing dynamics in our quarterly revenue curve.
Speaker 2: As we move into fiscal 2024, we are currently assuming our customers' buying and launching behavior will roughly mirror fiscal 2023, leading to a similar quarterly revenue cadence to what we saw last year.
Speaker 2: We'd also like to give an update on the delays we faced with getting regulatory approvals for our new vertical video products. We are happy to report that we have now received approvals from all but one client.
Speaker 2: A few of these programs have gone live, and the remainder will launch over the next quarter or two based on our client strategies.
Speaker 2: While these programs have not run for very long, the preliminary engagement and ROI data is incredibly encouraging, and we believe our new point of care and peer-to-peer offerings will be large contributors to our growth over the next several years. Finally, we are excited to host our inaugural investor day on June 6.
Speaker 2: where we will do a deeper dive on our product and discuss our longer-term financial targets.
Speaker 2: With that, I will turn it over to the operator for questions. We will now open the line for questions. We have 30 minutes for Q&A. Our first question comes from the line of Brian Peterson with Raymond James. Please go ahead. We will now open the line for questions.
Speaker 1: Hi guys, thanks for taking the question. So first one for Jeff, you mentioned that you expect a tougher year on upsell and I kind of followed up on that as well. Is there anything that you're hearing from customers on that dynamic? And I'm just curious if that perspective on the annual upsell has changed versus what you guys were thinking 90 days ago. Yeah, thanks, Brian . This is Jeff.
Speaker 1: Next week we're getting together with a few dozen of our top clients to spend a couple days together talking about the landscape and where we're going together. I will say if you look at the standard media index data, it showed that the pharma overall ad spend was up 12% in January and 14% in February .
Speaker 1: And that's in line with the eMarketer stat we put out a few quarters ago that we thought this year would be a low teens in terms of overall growth. And that's driven by the shift to digital and just the overall growth within pharma. The overall pharma ETF in the US is only down 5% on the year.
Speaker 1: with some big new drug launches this year, we actually have some cause for optimism as we grow throughout the year. But I think the short answer is we're being conservative because it's an uncertain macro, and after last year we certainly don't want to be uncertain again.
Speaker 1: Thanks, Jeff. It may be a follow-up on Point of Care. It's encouraging to see the ROI, the engagement stats. Is it right to think about the revenue contribution? Will be more back-end loaded from that product this year? Any help on how much that's contributing to June ? Thanks, guys.
Speaker 1: Yeah, I'll take a first stab at this, but I think Anna will provide some more color on the numbers. I'll just say the product launch for the clients that we've launched before, all but one, done really well. As Anna said in her prepared remarks, the engagement is much better than what we've seen. The ROI, based on the first 10 weeks of data from IQVIA, also much higher than what we've seen last week.
Speaker 1: seen. So we're really excited about where this can go and if you boil it all down and a couple minutes before a doctor sees a patient on a telehealth visit, we have a million minutes a month now that doctors are sitting there you know just staring in an empty room in their own camera. It's a beautiful time to remind them of the medications that are covered by their patients insurance plans.
Speaker 1: making those kind of quick reminders much easier, very close to the actual decisions being made. So we think it's a pretty unique space that we've opened up here. But we did have to get it through Med-Legal Review. I will say the one client that hasn't approved it, we do have a meeting with them tomorrow where we're hoping to finalize it and get approval. They pride themselves on being the most conservative legal department in the industry.
Speaker 1: But I think you're right that we will see this roll in throughout the year. And I'll turn it to Anna.
Speaker 1: right that we will see this roll in throughout the year. I'll turn it to Anna, maybe with a few numbers on that. Anna?
Speaker 2: Yeah, sure. And Brian , just to clarify here, we have received approval for all but one client, but only a few of those have gone live. So we do have quite a few programs still left to launch. I think since these are newer formats without proven ROI and our clients have also developed more robust digital strategies internally, we're definitely having more collaboration on content strategy than typical for other products.
Speaker 3: question comes from the line of Scott Berg with Needham. Please go ahead.
Speaker 4: Hi everyone, thanks for taking my questions. I guess I have a follow up to Brian's last one question there for you, Ana. Is the revenue contribution from these new products, is that the, I guess, is that the kind of items that are directly driving the modest acceleration and revenue growth from kind of quarters?
Speaker 4: 2 through 4 this year. Is there other dynamics to be mindful of there?
Speaker 2: Sure, I think that's the primary piece, is once we get these new products live, we will be able to see a little bit of reacceleration there. The other piece, as I mentioned in our prepared remarks, is that we are proud to have seen our subscription revenue growth actually reaccelerate in Q4.
Speaker 2: So if we look back at Q4, our subscription revenue growth is 20%. That's up from the 18% that we saw in Q3. So I think that's a good indication of the momentum we have at our business as we're launching our customers calendar year 2023 programs. So we feel like once we get those new products live as well in the coming months and weeks.
Speaker 2: then we will see kind of even a further uptick there.
Speaker 4: Great. Then from a follow-up, Jeff, you mentioned the two new hires that were press release this afternoon. Obviously, big titles, interesting backgrounds relative to your business because one comes from the industry, obviously. What do you expect them to bring to the company that might operate differently than what you all have all done before? On the commercial side, are you looking for any?
Speaker 1: team or strategy, but we're excited to have both Craig and Ben join us. I mean, they've been key players in scaling, you know, two physician platform businesses, much like our own to well over a half billion each in revenue. So, uh, we're looking for them to help build out our product strategy and help us continue to work with more clients more productively.
Speaker 1: across more channels. So excited to have them both with us. Again, they bring a ton of experience in scaling businesses.
Speaker 1: over half a million in revenue, like you said, directly in our industry. I'll say that I believe this is the time when great companies are built, great teams are built, when the markets are a little bit tougher. These two folks we would have hired five years ago if we could have. The reality is that...
Speaker 1: it's just been the tougher market that's allowed us to go and bring them on board. So we're excited to keep growing our team and to keep investing in folks with great experience like what Craig and Ben bring.
Speaker 4: Great, that's all I have. Thanks for taking my questions.
Speaker 3: The next question comes from the line of Richard Close with Canaccord Genuity. Please go ahead.
Speaker 1: Yes, thanks for the questions. Congratulations on the year. And maybe just to hit the first quarter revenue again, was there anything else that you know maybe isn't coming in that maybe you expected? I think if I go back to the fourth quarter call, you talked about a slight-
Speaker 1: revenue step up for Q to first quarter and I just want to better understand that.
Speaker 2: Sure, yeah, it's a good question, Richard. So back in February , we had assumed that Q1 would be flattish based on the trajectory of launches. As I mentioned in my prepared remarks, Q1 was
Speaker 2: Only a few of those programs have gone live from our new products. And so that's really the big piece that we're seeing that's resulted in Q1 to actually look pretty similar to last year. So because we didn't see that step up from new products that we hoped to see.
Speaker 2: The curve is actually looking pretty similar to fiscal 2023. And if we look back historically at our Q1 over the last two years, Q1 has represented about 21 percent of our total annual revenue, which is exactly in line with what we're seeing today. So it's actually pretty similar to historic.
Speaker 1: Okay, that's helpful. Jeff, I was wondering maybe if you could talk about the competitive landscape. You just mentioned it's a tougher times, whatnot. I'm just curious whether it's changing any and I think IKEA is acquiring deep intent, but the FTC's got some things to say on that.
Speaker 5: Our physician network has never been stronger, but some of the competition that we have faced has suffered from digital privacy regulation, which on the whole is a net positive for us. Our physician's first approach means we draw a hard line on protecting our physician's privacy. Zero percent of our revenue is there.
Speaker 5: ever was based on cookie technology. We don't do banners. And so we're advantaged over those who lean more heavily on those technologies.
Speaker 5: within analog competition, whether it's through the lens of the tools doctors use or the dependency of the healthcare system on
Speaker 5: snail mail, fax, paperwork. It's a continued shift that we're seeing where not only is there a shift to these new mobile digital technologies, but there are permanent habits being built, both among our doctors and among our partners that we think will position us for the next few years.
Speaker 6: Thank you.
Speaker 3: The next question comes from the line of Sandy Draper with Guggenheim Securities. Please go ahead.
Speaker 7: Thanks very much. I guess my first question is on the medical recruiting side. If I sort of back in, I obviously note the pickup in subscription revenue, but if I back out, it looks like there was a slowdown in medical recruiting. Could just be a quarterly trend, but just wanted to get a sense for what's going on there and then also
Speaker 2: what your sort of outlook for the medical recruiting revenue growth would be for 24? Yep, sure. Happy to take that one, Sandy. So, curative, which is the only non-subscription part of our business, and it is temporary and permanent physician staffing, growth was, the growth there was actually flat year over year.
Speaker 2: compares here. As we get past these tough compares and we look ahead, we do believe curatives growth will reaccelerate and we're seeing some positive momentum in that business. However, we definitely believe that our core marketing business will continue to lead our top line growth, which is why we're so pleased to see that growth reaccelerate there in Q4, which really points to positive momentum in the large.
Speaker 7: know if I need to update that. The numbers looked a little different from, and I want to make sure that 294 is right.
Speaker 2: Absolutely, yeah, you'll see that in the 10K that comes out. But there's short answers, there's a lot of M&A in the pharma industry. You've got Pfizer buying BioHaven, Amgen buying Horizon. And what we do is we net out the number for acquisitions so that we're truly looking at apples to apples numbers. So you'll see a footnote in the 10K that refers to consolidation.
Speaker 3: please go ahead.
Speaker 1: Thanks for taking the questions. Anna, maybe one for you to start. I know we've talked about deferred revenue in the past and maybe not being the ultimate indicator of future sales performance, but it was up about 50% sequentially and broke the 100 million mark for the first time. I was curious if you could just offer a little bit of color on what's driving the level of strength there.
Speaker 2: Sure. We're seeing more of our customers' requests to receive their first invoice in the calendar year that the program is running. So Q4 ended up becoming a really strong billings quarter for us. You can see that in our deferred and you can see that in our ARs. They're both up quite significantly.
Speaker 2: But I would kind of continue to caution, we've never really thought of deferred revenue as a meaningful metric for our business because we have milestone based billing, which really means a significant amount of backlog doesn't show up in our deferred revenue balance. So just because it shows strength this quarter, I still wouldn't put too much weight in that data point. Okay, fair enough. And then.
Speaker 1: Maybe one for Jeff, just to get your update on the hospital market. We talk a lot about the pharmaceutical market. I know there's been some puts and takes there with med legal review, but you also have a very high ROI product for hospitals. I'd love to get an update on how that market is progressing. Thanks. Keep pushing up.
Speaker 1: Yeah, thanks Ryan. Short answer is going really well. I will say that in the IT part of the market with hospitals, I'm really pleased that we're emerging through the end of the pandemic here. And we are really emerging as the leader in providing telephony and telehealth for our doctors.
Speaker 1: over 380,000 unique active providers this last quarter, the best in class ranking, where 80% of our clients say that we're part of their long-term plan. And actually one of the bit of good news for us with the end of the public health emergency.
Speaker 1: is that the HIPAA rules that were sort of lax during the public health emergency have now become enforced again, which is good for us and that's positive because we've always been HIPAA compliant and we've always gone through the privacy committee reviews with every 200 plus clients we work with.
Speaker 1: So, if anything, I think this will be a net benefit for us because some of the solutions that some hospitals have been using that aren't HIPAA compliant will now come our way. So, overall, things go pretty well for us in the hospital market. Okay, great. Thank you so much.
Speaker 1: The next question comes from the line of Stan Berenstine with Wells Fargo Securities LLC. Please go ahead. Hi. Thanks for taking my questions. I wanted to ask you, a competitor recently talked about moving more revenue economics to a performance-based model. So your platform generates high ROI.
Speaker 1: we run and that becomes a basis for us to have our next year pricing and program descriptions. We have done some you know ROI guarantees of sorts in some of our contracts but what we see is that really big pharma companies with special needs Dimitri and Artis obviously think of very big providers especially
Speaker 1: They don't believe in giving you a percentage, the gain share approach. At best you can do it with the small mid-tier companies. And there, again, the economics just aren't probably worth the overhead. So it's great that others are out there doing it. I think, again, the ROI will remain core to our selling proposition and core to what we're doing.
Speaker 1: We'll continue to prove our ROI, we'll continue to charge more, but at this point I wouldn't expect that there'd be a ton of upside from gain share light deals.
Speaker 7: Got it, helpful. Then maybe a question for Anne as a follow-up. Just on capital deployment, are you comfortable with the current reinvestment rates across R&D, S&M? Do you think there's some incremental benefit you can get from increasing spend there?
Speaker 2: Sure, it's a great question, Stan. And we certainly are continuing to invest in R&D and S&M in particular, especially as we focus on more products for our physicians, such as DocsGPT, and more products for our customers, such as peer-to-peer and point-of-care. So that's why you see our EBITDA margins actually flat year-over-year, because of the fact that we're continuing to invest.
Speaker 2: to deliver a value to our shareholders via share repurchases as well.
Speaker 3: Great, thanks so much. The next question comes from the line of Stephanie Davis with SVB Securities. Please go ahead.
Speaker 8: Hey folks, thanks for taking the question. So first one, Jeff, I know you talk about why you want to go make these new hires because you know, talent is available on the market. But I was hoping you did tell us more on what your follow-on impact will be seeing.
Speaker 1: Are there any goals you'll have for these folks in the first year or any sort of greater predictability you hope to get with such senior folks in the commercial side? Thanks, Steph. Good question. Yes, they definitely have dollar signs in their bonus packages and programs and we are looking for them to lead our overall top line growth.
Speaker 1: Ben and Craig both have a ton of experience there. They're actually going to tell you more about this live at our investor day June 6 coming up at the New York Stock Exchange. So I'll let them speak to it a bit more but suffice it to say that with the mega channel that we have, you know, this record engagement from positions not only engaging with this around
Speaker 1: professional network, you know, news and colleagues, but also around their day to day workflow of checking their calendar and calling a colleague and calling a patient, I think really opens up a lot of avenues for us for win win growth. All right, I'll sit tight and wait for the investor day. And then Anna, can you tell us a little bit about the
Speaker 8: the 24% growth in deferred revenues. It looks like it's coming at a much higher rate than you have had historically. When I look at that kind of growth metric versus the expectations, those are the ones you've guided.
Speaker 8: Is there anything beyond campaign timing that's driving some of the Delta there?
Speaker 2: Sure, you know, back to Ryan's question on this as well. I think the main thing that we're seeing is just a little bit of a difference in how our customers want to be billed. So they're requesting to receive their first invoice in the calendar year where the program's running. We've got a really, really strong billings quarter in Q4.
Speaker 2: So as I mentioned before, I really wouldn't put too much weight in our deferred revenue. We've never thought about it as a meaningful metric for the business because of our milestone based billing. So I think that deferred revenue balance being up so much isn't something that I'd put too much weight in.
Speaker 6: Thank you.
Speaker 3: The next question comes from the line of Jessica Toussaint with Piper Sandler. Please go ahead. You're welcome.
Speaker 8: Hi, thanks so much for taking the questions and congrats on the new hires. So I was just hoping you could maybe explain how you're pricing the point of care and peer-to-peer modules, just given that they're so new and they don't have ROI studies attached yet. And can we kind of think of these solutions as maybe being discounted until those studies are generated, at which point you might be pricing in flux.
Speaker 2: maybe towards the back half of 2024 or FY24. Sure Jess, I'm happy to take a stab at that one. So you are absolutely right. These are very new products, very innovative products. We are pricing them at a premium. That said, we are constantly monitoring the potential ROI of what these could be.
Speaker 2: which the prelims show significantly higher than our median. So once we start getting these first ROI studies back, we will likely be able to continue to be opportunistic on pricing there. So, we're trying to find that right fit, but we're also trying to be thoughtful on what the long term could be for these new products.
Speaker 8: That's really helpful. And then my quick follow-up would be, I think you guys convened your 11th annual Docs Tech Summit in March. So just any learnings from that event that you want to highlight or that we should be thinking about heading into FY24. Thanks.
Speaker 1: Yeah, this is Jeff. We had over 200 physicians come out to San Francisco from around the country. Top physicians, chairs of their departments. We got a lot of great feedback over the two-day weekend with them all. Again, we'll talk about this more at our investor day, but I'll just say I've never been more excited about our product pipeline.
Speaker 1: 11 and a half hours a day, one and a half hour of that at home, usually at night. And again, the ability to help doctors treat more patients as opposed to spend more time typing excites a lot of folks, including us.
Speaker 1: And you know with thousands of doctors using DocsGPT and having it steadily grow throughout this quarter without any marketing on our part it's all been word of mouth.
Speaker 1: I think we've got a pretty unique window into what things doctors actually find most helpful when it comes to this new technology.
Speaker 6: Great, thank you.
Speaker 3: The next question comes from Elizabeth Anderson with Evercore ISI. Please go ahead. Thanks so much for the question. I heard that you said sort of about the sort of overall OPEX levels. I was wondering if you could go into maybe some more detail in terms of the R&D.
Speaker 3: areas of focus for this year in 2024 and how they differ maybe from past years.
Speaker 5: Hey, Elizabeth. This is Nate. I can take that one. So again, at our upcoming investor day, we'll actually highlight some of the recent product improvements that our team has been focused on. We are fortunate to have a pretty sizable R&D team, which means we are able to get new approval on our site.
Speaker 5: that we're building and so we invest extra time to integrate those features so that they're not a series of disparate functionalities. For example, our Amazon acquisition after we spent some substantial R&D time there now has more seamless integration with key elements of our workflow suite so that a physician who's navigating one product
Speaker 5: can quickly leapfrog into the next product to say do a communication or ensure that care is appropriately coordinated. There's also a decent amount of investment in cutting-edge technologies such as GPT that has been mentioned already, our early focus there is-
Speaker 5: of course, no surprise that physicians' interests were around reducing administrative burden. But that's just one area that we can have a lot of meaningful impact. And with over 80% of physicians at Doximity, we're able to leverage these technologies to achieve an impact that others in the market can't due to our network effect and our proprietary data.
Speaker 3: Thanks, that's very helpful. And Anna, maybe one for you. Is it possible to give us any more details on sort of the cadence of the gross margin across the fiscal year? Is it something we should think of, anything to call out that would make it sort of different from how we thought about it last year? Just curious about any puts and takes there. Thanks.
Speaker 2: Sure. A short answer is we expect our gross margin to look very similar to how it looked last year. Similarly, we expect our Justin EBITDA margins to look very similar to how they looked last year. And you can see that already kind of mirrored in our Q1 guide where it starts out a little bit light in Q1 and then it continues to increase throughout the year. So we're expecting.
Speaker 1: Rev between revenue gross margin EBITDA it to look very very similar to fiscal 23 Perfect. Thanks so much The next question comes from the line of David Larson with BT IG, please go ahead I Can you talk a little bit more about doc GPT and what exactly it does? it looks a little bit like you know chat GPT and
Speaker 1: Have you done any work around how much money that can save the doc practices themselves in terms of like administrative burdens, FTEs and so forth? And will you actually generate revenue from it? Will you price it? Thanks. Yeah, David, this is Jeff. I'll take that. So you're right. I think it saved doctors a ton of time. I think it has already. Like I said, we're doing thousands of queries a week. And you know, the integration seamlessly into our facts.
Speaker 1: Believe it or not, it's super helpful because a lot of what doctors have to do is fax a prior authorization or pre-authorization letter or send a drug approval letter or drug appeal letter to insurance companies. And that's not something that there are many other systems out there to help them with. The main help they get is from the pharma companies themselves, who we obviously work with, but they have to call some 1-800 number, wait on line, get on hold.
Speaker 1: Again, I think the ability to automate a lot of that can make it easier for doctors to handle the excessive documentation burdens that they have. Yeah, you're right that this site is powered by ChatGPT. We've partnered with OpenAI. We've been working with them for about a year now. That's it for now, everybody.
Speaker 1: continue to think that they've got a leading product, although we're not wed to it, we can certainly use other products as they come along. But we think there's a lot of opportunities here. I think there's a lot of questions. At the end of the day, being a physician is an information job and a communication job, and it can help out a lot with both.
Speaker 1: I will share one little vignette from our 200 Doctor Advisory Board. In one of the main places that they see DocsGPT helping them out, it's not just the insurance appeal letters, but also in writing the technical jargon that they understand medically in a seventh grade reading level so that a patient can understand it. And that kind of ability to translate.
Speaker 1: is not something that they're taught in medical school. So we're excited to help them out with it. In terms of the business model around it, the good news is that we have a lot of ways to monetize physicians. It's just another channel of access for both our hospital and pharmaceutical clients. But I think the transaction here that gets really exciting.
Speaker 1: is helping both of those parties with reimbursement, which of course has a direct benefit to both hospitals and pharma companies. Great. Thanks very much. And then Anna, on the G&A side, it looks like your G&A costs improved as a percentage of revenue pretty significantly year over year in the quarter by over 100 basis points. What's driving that and is that sustainable? Thank you. Sure. It's a great question. We certainly saw if you kind of look back as we were going.
Speaker 1: Great, thanks very much.
Speaker 1: The Q&A portion of the call has now concluded. I will now pass the call back to Doximity CEO Jeff Tangney for closing remarks. Thank you. I'd like to end by thanking our record number of physician members, our clients, and of course our entire team. We hope to see many of you live at the New York Stock Exchange in a few weeks.
Speaker 9: Thank you for joining. Bye now.
Speaker 3: This concludes today's conference call. Thank you for joining. You may now disconnect your lines.