Q2 2024 Doximity Inc Earnings Call

Speaker 1: Good afternoon. My name is Krista and I'll be your conference operator today. At this time, I would like to welcome everyone to the Doximity Fiscal Second Quarter 2024 earnings.

Good afternoon, My name is Krista and I'll be your conference operator today at this time I would like to welcome everyone to the Doximity fiscal second quarter 2024 earnings call.

Speaker 1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Perry Gold, vice president of investor relation. Perry, you may begin your conference.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question during that time simply press star followed by the number one on your telephone keypad and if you would like to withdraw your question again press Star one. Thank you I would now.

I'd like to turn the conference over to Perry Gold Vice President of Investor Relations.

You may begin your conference.

Speaker 2: Thank you operator. Hello and welcome to Doc Simmity's Fiscal 2024 Second Quarter Earnings Call. With me on the call today are Jeff Tangney, co-founder and CEO of Doc Simmity, Dr. Nate Gross, co-founder and CSO, 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 8K, all of which are available on our website at investors.docsimmity.com.

Thank you operator, Hello, and welcome to Doximity as fiscal 2024 second quarter earnings call with me on the call today are Jeff Tangy co founder and CEO of Doximity, Dr. Nate gross co founder and CSO and enterprise 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, all of which are available on our website at investors Doximity dotcom.

Speaker 2: 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 display any obligation to update any forward-looking statements for out.

As a reminder, today's call is being recorded and a replay will be available on our website.

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.

Speaker 2: Please refer to the risk factors in our annual report of Form 10K, any subsequent Form 10Qs, and our other reports and filings with the SEC that may be filed from time to time, including our upcoming filing on Form 10Q.

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.

Speaker 2: Are forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, November 9th 2020?

Our forward looking statements are based on assumptions that we believe to be reasonable as of todays date November 19 2023.

Speaker 2: Of note, it is Dr. Simone'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 8k.

Of note it is doximity as 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.

Speaker 2: Today, we will discuss certain non-gap metrics that we believe aid in the understanding of our financial risks.

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.

Speaker 2: A historical reconciliation to comparable gap 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 one time 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 Tainey. Jeff?

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 Tony Jeff.

Speaker 3: Thanks, Farry, and thank you everyone for joining our second quarter earnings call. We have three updates today. Our financials, network highlights, and new process.

Thanks, Perry and thank you everyone for joining our second quarter earnings call. We have three updates today, our financials network highlights and new products first our topline I am pleased to report that we delivered a $114 million in revenue for the second quarter of our fiscal 2024% to 4% beat over the high end of our guidance and 11.

Speaker 3: First, our top line. I'm pleased to report that we delivered $114 million in revenue for the second quarter of our fiscal 2024, a 4% beat over the high end of our guidance, and 11% growth year-on.

1% growth year on year.

Speaker 3: Our 20 largest clients who know and measure as best continue to be our fastest growing with a net revenue retention rate of 119%.

Our 20 largest clients, who know and measure US best continues to be our fastest growing with a net revenue retention rate of 119%.

Speaker 3: Our bottom line was also strong in Q2, with an adjusted EBITDA margin of 48% or $54 million, which was 20% above the high end of our guidance.

Our bottom line was also strong in Q2 with an adjusted EBITDA margin of 48% or $54 million, which was 20% above the high end of our guidance.

Speaker 3: Looking ahead, we're raising our annual revenue guidance midpoint by $6 million or 1% to 11% growth year on year. We're also raising our EBITDA guidance midpoint by 6% to $213 million or a 46% margin.

Looking ahead, we're raising our annual revenue guidance midpoint by $6 million or 1% to 11% growth year on year. We're also raising our EBITDA guidance mid point by 6% to $213 million or a 46% margin.

Speaker 3: We will remain Cisco-Lieprudent and we are reiterating our long-term model guide of 45 plus percent EBITDA margins. However, given continued macro uncertainties, today we're withdrawing our five-year growth target. This said, we still fully expect to be a billion dollar company. And 2028 will remain our internal stretch goal to get there. Our CFO animal will provide more color on this in a minute.

We will remain fiscally prudent and we are reiterating our long term model guide of 45 plus percent EBITDA margins. However, given continued macro uncertainties today, we're withdrawing our five year growth target just said, we still fully expect to be $1 billion company in 2028 will remain our internal stretch goal to get there.

Our CFO Andrew will provide more color on this in a minute.

Speaker 3: Okay, so that's our Q2 financial highlight. A 4% B, a 1% raise, and 48% eva.margin.

Okay. So thats, our Q2 financial highlights a 4% be a 1% raise and 48% EBITDA margins.

Speaker 3: Okay, turning now to our physician network. In short, we've never been more used or more useful. Our unique active users on a quarterly, monthly, weekly, and daily basis all hit record highs last quarter, and all are a double-digit percentages year on year. Notably, it's our daily users that grew the most underscoring the integral role we now play in day-to-day patient care.

Okay, turning now to our physician network in short we've never been more used before more useful or unique active users on a quarterly monthly weekly and daily basis, all hit record highs last quarter and all are up double digit percentages year on year.

Notably it is our daily users that grew the most underscoring the integral role we now play in day to day patient care.

Speaker 3: Our newsfeed did particularly well in Q2, and it both record reached and usage. Our AI algorithms are playing an increasing role

Our newsfeed did particularly well in Q2 it hit both record reached and usage. Our AI algorithms are playing an increasing role in our success as they read over a half a million articles each month to personalized news briefs for each doctor based on their subspecialties procedures and interests.

Speaker 3: We're also now using AI to rewrite medical journal headlines, making them more succinct and readable, leading to higher engagement.

We're also now using AI to rewrite medical journal headlines, making them more succinct and readable leading to higher engagement.

Speaker 3: With each tap on our newsfeed, our algorithms learn and improve, and our decade-long data moat wipes.

With each tap on our news feed our algorithms learn and improve and our decade long data moat widens.

Speaker 3: We're proud to help doctors stay up to date on the research that matters most to them.

Proud to help doctors stay up to date on the research that matters most to them.

Speaker 3: Our workflow products, scheduling AI writing tools and telehealth also hit fresh highs in Q2 with over 550,000 unique active prescribers. And we continue to gain share here post-COVID, signing more top hospitals to our EHR integrated tools. We now count 16 of the top 22 US hospitals as workflow clients and over 44% of all US physicians on our enterprise platform.

Our workflow products scheduling AI, writing tools and telehealth also hit fresh highs in Q2 with over 550000 unique active prescribers and we continue to gain share here post COVID-19 signing more top hospitals to our EHR integrated tools, we now count 16 of the top two.

<unk> to U S hospitals as workflow clients in over 44% of all U S physicians other enterprise platform.

Speaker 3: Now for our product spotlights. We have two new products in Q2, DocDefender and our Pharmaceutical Client Portal.

Now for our product spotlight, we have two new products in Q2, Dr defender and our pharmaceutical client portal.

Speaker 3: Doctafender.com is our new free privacy service for Doc.

Dr. <unk> Dot com is our new free privacy service for doctors.

Speaker 3: Just as our popular DocDialer product protects doctor's cell phone numbers from off-hour callbacks, DocDefender protects their family's home address or phone numbers from being easily found online.

As our popular dock dialer product protects Dr. Cellphone numbers from off our callbacks Dr defender protects their family's home address or phone numbers from being easily found online.

Speaker 3: Sadly, OSHA reports that half of US healthcare workers will experience violence in their careers. And a full 35% of physicians we surveyed had already had a patient find their home address or personal information online.

Sadly Osha reports that half of U S health care workers will experience violence in their careers and a full 35% of physicians. We surveyed had already had a patient find their home address or personal information online.

Speaker 3: Doc Defender works by requesting take downs or removals from the many people finder websites out there.

Dr defender works by requesting takedowns or removals from the many people find our websites out there similar delete me services exist, but they are expensive.

Speaker 3: Similar delete me services exist, but they're expensive. We believe doctors who increasingly serve on the front lines of society's toughest problems deserve this basic protection for.

We believe doctors, who increasingly serve on the front lines of societies toughest problems deserve this basic protection for free.

Speaker 3: Like many of our best products, the idea for Dr. Fender came out of our annual 200 Physicians Summit. This year, the recent spike in physician shootings weighed heavily on the group, and so we brainstormed a technological way to help. Dr. Fender was the top vote getter of the weekend.

Like many of our best products the idea for Dr. Vendor came out of our annual 200 physicians summit.

This year the recent spike in physicians shootings weighed heavily on the group and so we brainstormed a technological way to help Dr.

Dr defender was the top vote getter of the weekend.

Speaker 3: thousands of doctors have already beta tested doctor fender and the reviews so far have been great We're excited to roll it out to all of our physician members this quarter

Thousands of doctors have already beta tested Dr defender and the review so far have been great. We're excited to roll it out to all of our physician members this quarter.

Speaker 3: Okay now for an update on our new self-serve pharma client portal where we made incredible progress this last quarter and now have a strong phase one beta product out and ready for our

Okay now for an update on our new self serve pharma client portal, where we made incredible progress. This last quarter and now have a strong phase one beta product out and ready for our clients.

Speaker 3: As we did with our hospital client portal, we began by rolling out to a dozen or so pharma test clients. So far, the feedback.

As we did with our hospital client portal, we began by rolling out to a dozen or so pharma test clients. So far the feedback has been very positive.

Speaker 3: Clients like the ability to monitor their programs in real time, to see their IQ via ROI reports integrated seamlessly, and leverage our AI brainstorm bot to write better headlines.

Clients like the ability to monitor their programs and real time do you see either IQ via ROI reports integrated seamlessly and leverage our AI brainstorm bot to write better headlines.

Speaker 3: Our plan is to open up this client portal to all of our pharma clients early next year. Then by next summer's upsell season, we'll layer in the ability to relaunch, add targets, and expand existing programs directly from the site.

Our plan is to open up this client portal to all of our pharma clients. Early next year, then by next summer's upsell season, where layer in the ability to relaunch add targets and expand existing programs directly from the site.

Speaker 3: We expect this client portal will not replace, but instead strengthen our white glove service for our top clients. It'll allow our service team to spend less time emailing about reports, and more time on our newer point of care, peer to peer, and repenable myth products.

We expect this client portal will not replace but instead strengthen our white glove service for our top clients. It will allow our service teams to spend less time E mailing about reports and more time on our newer point of care peer to peer and rep enabled products. It will also make it easier for us to reach and serve the longer.

Speaker 3: It'll also make it easier for us to reach and serve the longer tail, smaller client.

Tail smaller clients.

Speaker 3: By virtue of our unique reach and usage, we believe we're well positioned to become pharma's premier digital HCP partner.

By virtue of our unique reach and usage, we believe we're well positioned to become farmers Premier digital HCP partner.

Speaker 3: And we're proud to now offer client service that's both high touch and high tech.

And we're proud to now offer clients service, that's both high touch and high Tech.

Speaker 3: In closing, our Q2 saw record physician engagement, better than expected sales and profit, and continued innovation with a new privacy product and our client portal.

In closing our Q2 saw record physician engagement better than expected sales and profit and continued innovation with a new privacy product and our client portal.

Speaker 3: We believe healthcare is still in the early innings of its shift to digital.

We believe health care is still in the early innings of its shift to digital.

Speaker 3: And with the Advinum Genitive AI, we think tech will transform healthcare more this decade than ever before.

And with the advent of generative AI, we think tech will transform health care more this decade than ever before.

Speaker 3: We're honored to continue to put physicians first and to be the leading digital platform for doctors.

We're honored to continue to put physicians first and to be the leading digital platform for doctors.

Speaker 3: I've personally never been more bullish about our long-term up.

I've personally never been more bullish about our long term opportunity.

Speaker 3: And with that, I'll hand it over to our CFO , Anna Bryson, to discuss our financials and guidance. Anna? Thanks, Jeff.

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

Thanks, Jeff and thanks to everyone on the call today.

Speaker 4: Second quarter revenue grew to $113.6 million, up 11% year over year, and exceeding the high end of our guidance rate.

Second quarter revenue grew to $113 6 million up 11% year over year and exceeding the high end of our guidance range.

Speaker 4: Similar to prior quarters, our existing customers continue to lead our growth.

Similar to prior quarters, our existing customers continue to lead our growth.

Speaker 4: We finished the quarter with a net revenue retention rate of 114 percent.

We finished the quarter with our net revenue retention rate of 114%.

Speaker 4: For our top 20 customers, net revenue retention was higher at 119%. So our biggest, most sophisticated customers are still our fastest growing.

For our top 20 customers net revenue retention was higher at 119%. So our biggest most sophisticated customers are still our fastest growing.

Speaker 4: We ended the quarter with 290 customers contributing at least $100,000 each in subscription-based revenue on a trailing 12-month base.

We ended the quarter with 290 customers contributing at least $100000 each and subscription based revenue on a trailing 12 month basis.

Speaker 4: This is a 3% increase from the 281 customers that we had in this cohort a year ago. And these customers accounted for 88% of our total revenue.

This is a 3% increase from the 281 customers that we had in this cohort a year ago.

These customers accounted for 88% of our total revenue.

Speaker 4: As mentioned, we are seeing the strongest growth come from our largest customers.

As mentioned, we are seeing the strongest growth come from our largest customers.

Speaker 4: To give some more color around this, we ended the quarter with 51 customers contributing at least a million dollars each in subscription-based revenue on a trailing 12-month base.

Give us some more color around this we ended the quarter with 51 customers contributed at least $1 million each from subscription based revenue on a trailing 12 month basis.

Speaker 4: This is a 28% increase from the 40 customers we had in this cohort a year ago.

This is a 28% increase from the 40 customers we had in this cohort a year ago.

Speaker 4: Turning to our profitability, non-GAAP gross margin in the second quarter was 91% versus 90% in the prior year period.

Turning to our profitability non-GAAP gross margin in the second quarter was 91% versus 90% in the prior year period.

Speaker 4: Adjusted EBITDA for the second quarter was 54.2 million and adjusted EBITDA margin was 48%.

Adjusted EBITDA for the second quarter was $54 2 million and adjusted EBITDA margin was 48%.

Speaker 4: compared to $46 million and a 45% margin in the prior year period.

Compared to $46 million and a 45% margin in the prior year period.

Speaker 4: Now turning to our cash flow balance sheet and an update on our share repurchase program.

Now turning to our cash flow balance sheet and an update on our share repurchase program.

Speaker 4: We generated free cash flow in the second quarter of $11.6 million compared to $37.7 million in the prior year period, a decrease of 69% year over year.

We generated free cash flow in the second quarter of $11 6 million compared to $37 7 million in the prior year period, a decrease of 69% year over year.

Speaker 4: The cash outflow in Q2 included roughly $29 million in payments for estimated taxes for the first 6 months of the year, with roughly $10 million of that related to the capitalization of R&D expenses.

Cash outflow in Q2 included roughly $29 million in payments for estimated taxes for the first six months of the year with roughly $10 million of that related to the capitalization of R&D expenses.

Speaker 4: Given we have utilized nearly all our NOLs, as you consider modeling the impact of taxes in the future, we estimate that our effective tax rate will be between 20 to 25% and our cash tax rate will be between 25 to 30%.

Kevin we have utilized nearly all of our Nols as you consider modeling the impact of taxes in the future. We estimate that our effective tax rate will be between 20% to 25% and our cash tax rate will be between 25% to 30%.

Speaker 4: These rates may vary depending upon deductions from stock-based compensation and the capitalization of our

These rates may vary depending upon deductions from stock based compensation and the capitalization of R&D.

Speaker 4: During the second quarter, we repurchased 7.5 million shares at an average price of $22.45, representing $169 million.

During the second quarter, we repurchased seven 5 million shares at an average price of $22 45.

Representing $169 million.

Speaker 4: We ended the second quarter with 730 million of cash, cash equivalents and marketable security.

We ended the second quarter with $730 million of cash cash equivalents and marketable securities.

Speaker 4: As of today, we have completed all outstanding share repurchase programs, and our board has authorized an additional $70 million share repurchase.

As of today, we have completed all outstanding share repurchase programs and our board has authorized an additional $70 million share repurchase plan.

Speaker 4: Following the share repurchase efforts, our total shares outstanding have decreased by roughly 5%, or 8.8 million shares since our August .

Following the share repurchase efforts, our total shares outstanding have decreased by roughly 5% or $8 8 million shares since our August earnings release.

Speaker 4: We are pleased by the positive impact these efforts have had on shareholder value.

We are pleased by the positive impact these efforts have had on shareholder value.

Speaker 4: Share repurchases have been funded by our free cash flow. And as a reminder, our IPO proceeds remain untouched and available to invest in the business and M&A.

Share repurchases have been funded by our free cash flow and as a reminder, our IPO proceeds remain untouched and available to invest in the business and M&A.

Now moving onto our outlook.

Speaker 4: For the third fiscal quarter of 2024, we expect revenue in the range of 127 to 128 million, representing 11% growth at the midpoint, and we expect adjusted EBITDA in the range of 61 to 62 million, representing a 48% adjusted EBITDA margin.

For the third fiscal quarter of 2024, we expect revenue in the range of $127 million to $128 million, representing 11% growth at the midpoint and.

And we expect adjusted EBITDA in the range of $61 million to $62 million, representing a 48% adjusted EBITDA margin.

Speaker 4: For the full fiscal year, we now expect revenue in the range of 460 to 472 million, representing 11% growth at the midpoint.

For the full fiscal year, we now expect revenue in the range of $460 million to $472 million, representing 11% growth at the midpoint.

Speaker 4: We now expect the just to be but the in the range of 207 to 219 million representing a 46% Ardenne, Ajustity Bidamort.

We now expect adjusted EBITDA in the range of $207 million to $219 million, representing a 46% adjusted EBITDA margin.

Speaker 4: The increased outlook reflects an improvement in our close rates over the past 90 days.

The increased outlook reflects an improvement in our close rates over the past 90 days.

Speaker 4: Incremental budgets have been a locking, but this has occurred later than typical due to the macro environment.

Incremental budgets have been unlocking but this has occurred later than typical due to the macro environment.

Speaker 4: As our customers deploy these dollars, we're encouraged that proximity remains a top choice.

As our customers deploy these dollars we're encouraged that doximity remains a top choice.

Speaker 4: With engagement levels at all-time highs across our platform, we continue to deliver strong returns for our customers, and their desire to increase their program reach is evident in our Q3 revenue step-up.

With engagement levels at all time highs across our platform. We continued to deliver strong returns for our customers and their desire to increase their program reach is evident in our Q3 revenue step up.

Speaker 4: As you consider our implied Q4 guidance, please remember, we are providing wider ranges and baking in more variability for the portion of revenue not yet contracted. Now, we'll give an update.

As you consider our implied Q4 guidance. Please remember we are providing wider ranges and baking in more variability for the portion of revenue not yet contracted.

Now I will give an update on our long term financial targets.

Speaker 4: Given the broader macro backdrop remains relatively unchanged over the last year, we believe next year's market growth rate may look similar to this past.

Given the broader macro backdrop remains relatively unchanged over the last year. We believe next year's market growth rate may look similar to this past year.

Speaker 4: With this in mind, we believe it prudent to withdraw our 2028 revenue and rule of 65 target.

With this in mind, we believe it prudent to withdraw our 2028 revenue and we will have 65 targets.

Speaker 4: We still have strong conviction in our long-term opportunity and ability to outperform the market, but we are aware that we may face cyclical headwinds in end-market budget growth for longer than initially expected.

We still have strong conviction in our long term opportunity and ability to outperform the market.

But we are aware that we may say cyclical headwinds and end market budget growth for longer than initially expected.

Speaker 4: As it pertains to our long-term profitability, we expect our highly efficient vertical sales model to continue to deliver a best-in-class margin profile.

As it pertains to our long term profitability, we expect our highly efficient vertical sales model to continue to deliver a best in class margin profile.

Speaker 4: Due to this, we are reiterating our long-term operating model guidance of 85 to 90 percent non-gap growth margins and 45 percent plus a justity, but done March.

Due to this we are reiterating our long term operating model guidance of 85% to 90% non-GAAP gross margins and 45% plus adjusted EBITDA margins.

Speaker 4: As we look ahead, we are excited by the innovation we are bringing to the industry and the value we will continue to deliver for our customers.

As we look ahead, we are excited by the innovation, we are bringing to the industry and the value we will continue to deliver for our customers.

Speaker 4: Our new form of client portal has the potential to power a new level of personalization and efficiency on our platform. A win-win for our clients and firms.

Our new pharma client portal has the potential to power a new level of personalization and efficiency on our platform a win win for our clients and for our members. We believe this is an exciting and natural evolution of our business and will position us for market leadership for years to come.

Speaker 4: We believe this is an exciting and natural evolution of our business and will position us for market leadership for years to come. With that, I will.

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

Speaker 1: As a reminder, if you would like to ask a question, please press star one on your telephone keypad. We ask that you limit yourself to one question and one follow up. Your first question comes from the line of Brian Peterson from Raymond James. Please go ahead.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, we ask that you limit yourself to one question and one follow up your first question comes from the line of Brian Peterson from Raymond James. Please go ahead.

Speaker 5: Thanks for taking a question and gracing the strong order. So I'd love to get any color that you guys have heard from customers about calendar year 24 budgets. And I appreciate the comment that you just gave. But what have you heard in terms of any feedback or how they're thinking about budgets for next?

Thanks for taking my question and congrats on the strong quarter.

I'd love to get any color that you guys have heard from customers about calendar year 'twenty for budgets and I. Appreciate the comment that you just gave but.

What have you heard in terms of any feedback or how they're thinking about budgets for next year.

Speaker 4: Sure. Happy to take that one, Brian . So it's still a little bit too soon for us to know exactly what budgets will look like next year. You know, our best guess is that the calendar, your budgets growth rate will look roughly similar to what we saw this past year. So mid to high single digit growth.

Sure happy to take that one Brian So it's still a little bit too soon for us to know exactly what budgets will look like next year. Our best guess is that calendar year budgets growth rate will look roughly similar to what we saw this past year, so mid to high single digit growth.

Speaker 4: And now we do remain confident in our ability regardless of what the growth rate is to outperform the market. And as we're in the midst of our annual buying cycle right now, there are many things that both we and our customers are excited about around our new reporting tools, the potential to bring AI to their programs and the returns demonstrated by our new products. So there's a lot of really positive momentum happening in the business right now, but it's just too soon for us to give more color on the market growth rate.

We do remain confident in our ability regardless of what the growth rate is to outperform the market and as we're in the midst of our annual buying cycle right. Now there are many things that both we and our customers are excited about around our new reporting tools the potential to bring AI to their programs and the returns demonstrated by our new products. So theres a lot of really positive.

Omentum happening in the business right now, but it's just too soon for us to give more color on the market growth rates.

Speaker 5: I understood it and maybe keeping it to the product a little bit with doc defender and I know with am I on that you know I've just opened understand how you guys are thinking about potentially adding Modernization to that or you know how we're thinking about these new products in terms of wind apple starts impact across right? Thank you

Understood and maybe just pivoting to the product a little bit with doctor vendor and I know with <unk>.

Just wanted to understand how you guys are thinking about potentially adding monetization to that or how we are thinking about these new products in terms of when that will start to impact the growth rate. Thanks, guys.

Speaker 3: Yeah, thanks Brian , this is Jeff, I'll take that one. So first, we're so thrilled to have double digit percent growth across all of our active user categories. And that highest growth with daily users really is, I think, a true north signal for us that we're becoming part of the doctors, daily workflow, treating patients.

Yes. Thanks, Brian This is Jeff I'll take that one so.

So first we're so thrilled to have double digit percent growth across all of our active user categories and the highest growth with daily users really is I think.

A true north signal for us that we're becoming part of the doctors daily workflow treating patients.

Speaker 3: checking their schedules, using our AI tools to help. So we're really proud of that, and that to me is really the best out of the quarter. I think if you look at others in our space, our competition, they're not seeing that. If anything, I think they're seeing you're in your decline. So as we move out of the sort of COVID stay at home, heavy digital use.

Checking their schedules using our AI tools to help so.

We're really proud of that and that to me is really the best out of the quarter I think if you look at others in our space our competition, they're not seeing that if anything I think theyre seeing year on year declines as we move out at the sort of Covid stay at home heavy digital use.

Speaker 3: With regard to doctor vendors specifically, we have no monetization in that product today, but similar to our dialer product, we see a lot of opportunities for that, and that's something we'll phase in over time. The good news is it's a sort of product that doctors, once they start monitoring their privacy, they come back and check frequently as there are additional websites.

With regard to Dr. Vendor, specifically, we have no monetization and that product today, but similar to our dialer product, we see a lot of opportunities for that and Thats something we will will phase in over time.

The good news is it's a sort of product that doctors once they start monitoring their privacy they come back and check frequently as there are additional websites and.

Speaker 3: and other changes, and it's the kind of thing that's sort of whack-a-mole privacy-wise. It drives a lot of ongoing engagement.

And other changes.

The kind of thing Thats sort of whack, a mole privacy wise it drives a lot of ongoing engagement, our MRM product, which you mentioned continues to grow and do great probably less new news on that front, except to say as we did in our prepared remarks, we're at 16 of the top 22 health systems now.

Speaker 3: Our AMAM product which you mentioned continues to grow and do great, probably less new news on that front, except to cite as we did in our prepared remarks. You know we're at 16 of the top 22 health systems now who have an enterprise BAA or business associate agreement with us.

Who have an enterprise PAA or business associate agreement with us inside the EHR is inside their privacy agreements and powering their workflows.

Speaker 3: inside their EHRs, inside their privacy agreements, and powering their workflows.

Okay.

Thanks, Jeff.

Speaker 1: Your next question comes from the line of Richard Close from Canacor Genuity. Please go ahead.

Your next question comes from the line of Richard close from Canaccord Genuity. Please go ahead.

Speaker 6: Yes, thanks for the questions. And, you know, as we're preparing for the next budget year, and I'm curious if you could update us on demand for point of care, maybe versus the traditional newsfeed. Are you seeing any major differences there, you know, maybe point of care growing at the expense of the latter, the newsfeed?

Yes, thanks for the questions.

As we're preparing for the next budget year Anna.

Curious if you could update us on demand for point of care, maybe versus the traditional news feed are you seeing any major differences there.

Maybe point of care growing at the expense of the ladder the newsfeed.

Speaker 4: Sure, Richard. You know, the first thing I'll say is that we're excited to penetrate deeper into point of care and peer-to-peer budgets. And as we've had the conversations with our customers during this annual buying cycle, our customers are really excited about how these products can increase the value they're receiving from our platform when coupled with our other products suite.

Sure Richard.

First thing I'll say is that we're excited to penetrate deeper into point of care and peer to peer budgets and as we've had the conversations with our customers. During this annual buying cycle. Our customers are really excited about how these products can increase the value. They are receiving from our platform when coupled with our other product suites. So the programs we've run of peer to peer appointed.

Speaker 4: So the programs we've run have appeared to peer-to-peer point of care over the past year have demonstrated very strong returns. We've been able to prove to our customers that the more modules you buy, the higher your returns. So we're looking forward to expanding our customer reach and deepening our penetration here over time.

Over the past year have demonstrated very strong returns, we've been able to prove to our customers that the more modules you buy the higher returns. So we're looking forward to expanding our customer reach and deepening our penetration here overtime.

Speaker 6: Okay, and then with respect to the EBITDA margins, I guess the long term, 45% plus, but is there any reason why you can't keep up the, you know, the current level that you just reported and what's implied for the, yeah, for the third quarter?

Okay, and then with respect to the EBITDA margins I guess the long term.

45% plus but is there any reason why you can keep up the the current level that you just reported and what's implied.

Yes for the third quarter.

Okay.

Speaker 4: Sure, I'm happy to take that one. We plan to continue to invest in growth and invest in the business. We're doing that today with new products. We have our new client portal that will be investing in more, more, we have new business lines. We're investing in and we're continuing to hire. So from our perspective, we're certainly continuing to invest in growth. And so we think 45% plus margin as a long-term target is appropriate given those investments.

Sure I'm happy to take that one.

We plan to continue to invest in growth and invest in the business and we're doing that today with new products. We have a new client portal that we'll be investing in more and more we have new business lines, we're investing in and we're continuing to hire.

From our perspective, we're certainly continuing to invest in growth and so we think 45% plus margin is a long term target is appropriate given those investments.

Okay. Thank you.

Speaker 1: Your next question comes from the line of Ryan S. Daniels from William Blair. Please go ahead.

Your next question comes from the line of Ryan Daniels from William Blair. Please go ahead.

Speaker 7: Yeah, thanks for taking the questions. I'm hoping you could dive a little bit deeper into the beta users on the new Farmer client portal. Meaning, are you seeing quicker conversion on sales or better pricing? I know you've talked about some auction based pricing based on ROI. So, curious what you're seeing initially with those users.

Yes, thanks for taking the questions I'm, hoping you could dive a little bit deeper into the beta users on the new pharma client portal, meaning are you seeing quicker conversion on sales or better pricing I know you've talked about some auction based pricing based on rois. So I'm curious what you're seeing initially with those users.

Speaker 3: Yeah, Ryan, Jeff Tengney here. Yeah, I'll take that. So I've been joining quite a few of these calls with our clients

Yes, Brian Jeff here I'll take that so I'm enjoying quite a few of these calls with our clients.

Speaker 3: fun. We just had a director at a top five pharma company this week tell us it was his favorite meeting of the week to go through our client portal together. And that's because it's just a lot of insights that we can provide.

It's funny, we just had a director of the top five pharma company to sweep tell us. It was his favorite meeting of the week to go through our client portal together and Thats because its just a lot of insights that we can provide real time data, which he is excited about and the integration of the IQ via results allows him a again real time look at.

Speaker 3: real-time data, which he's excited about, and the integration of the IQV results allows him a, again, real-time look at...

Speaker 3: the incremental sales and ROI that we're delivering, which

The incremental sales and ROI that we're delivering which at the end of the day, it's the bottom line for four senior marketers inside pharma.

Speaker 3: You at the end of the day is the bottom line for senior marketers inside Pharma.

Speaker 3: So all that's gone super well. I do want to be up front that our phase one, the product that we have out in beta today, really is just providing these reports, is not providing the ability for clients to purchase

So all of that's gone Super well I do want to be upfront that our phase one the product that we have out in beta today really its just providing these reports is not by providing the ability for clients to purchase.

Speaker 3: additional waves or programs, but they've already asked about that. And so I think it will be a natural extension of that in our phase two, which in our prepare remarks we said we will have fully out for our next summer upsell season, to make it really easy for them to take this

Additional waves of programs, but they've already asked about that.

I think it will be a natural extension of that in our phase II, which in our prepared remarks, we said we will have.

Fully out for our next summer upsell season to make it really easy for them to take this.

Speaker 3: video that so many docs like and deploy that to a broader audience or to a different audience or to take actually one of the more fun pieces of the demo has been our GPD brainstorm bot where we can show you know physicians we've already seen all of your articles and messages are really engaged in your product in your market but then brainstorm additional things that may relate to their practice.

Video that so many docs like and deploy that to a broader audience or to.

A different audience or to take actually one of the more fun pieces of the demo has been our GPT Brainstorm Bot, where we can show physicians who've already seen all of your articles and messages are really engaged in your product in your market, but then brainstorm additional things that may relate to their <unk>.

Speaker 3: given that they see a lot of patients with comorbidities or whatnot and how they put that together. And of course, the brainstorm bot just comes up with ideas, but it's been fun, I'd say my favorite, is it's very good at creating wraps. So rhyming answers to insurance companies on why they won't do an insurance approval for that drug review.

<unk>.

Given that they see a lot of patients with comorbidities or whatnot and how they put that together and of course, the brainstorm, Bob just comes up with ideas.

But it's been fun to.

My favorite is it is very good at creating reps so.

Ryan being.

Answers to insurance companies on why they wont do in insurance approval for that drug reimbursement.

Speaker 3: So anyway, we've had some fun with it, but I would say today we're not doing purchasing on the portal. That's something that we will roll out with caution in a way that, again,

So anyway, we've had some fun with it but I would say today, we are not doing purchasing on the portal, that's something that we will rollout with caution.

In a way that again.

Speaker 5: stays with our high touch model but also bringing high tech.

Stays with our high touch model, but also bringing high tech to it sure sure. That's great and then I appreciate all that color and then as my follow up interesting comments in the prepared comments from you Jeff around daily users. I think you said that grew the most in your news feed is reaching record usage I'm curious if you've made changes to the.

Speaker 7: That's great. And then, appreciate all that color. And then, as my follow-up, interesting comments in the prepared comments from you, Jeff, around daily users. I think you said that grew the most, and your news feed is reaching record usage. I'm curious if you've made changes to the platform that's driving that, or if it's just the kind of halo effect of all the solutions you now have for these providers, kind of driving them to the platform more frequently. A good data point, so I just want a little more color there.

Platform Thats driving that or if it's just the kind of halo effect of all the solutions you now have for these providers kind of driving them to the platform more frequently.

Good data point, so I just wanted a little more color there. Thanks.

Speaker 3: Yeah, great question, Ryan. I think you should answer AI. We really are able to use AI more in our...

Yes, Great question, Ryan I think short answer is AI.

We really are able to use AI more.

<unk>.

Speaker 5: in our newsfeed. Yes, we have seen record growth in our daily active users and our overall news has led the way there. So I think we are the newsfeed of medicine for all intents and purposes. We're the place that when doctors have a few minutes, they'll open us up and go get up to date on what's new for their practice. And not just at a cardiology level, but at a procedure level, given their type of practice.

In our news feed.

Yes, we have seen record growth in our daily active users and our overall news has led led the way there.

So I think we are the new suite of medicine for all intents and purposes. We're the place that when doctors have a few minutes still open us up and go.

Get up to date on whats new for their practice and not just at a cardiology level, but at a.

At a procedure level given their type of practice.

Speaker 5: 10 years of data that we have on the things that they are most interested.

The 10 years of data that we have on the things that they're most interested in.

Speaker 3: So, I do think AI really has been helping our teams there a lot, and we continue to lean in there.

So I do think AI. It really has been helping our teams there are a lot and we continue to lean in there.

Yeah.

Speaker 1: Your next question comes from the line of Scott Berg from Native and Company. Please go ahead.

Your next question comes from the line of Scott Berg from Needham and company. Please go ahead.

Hi, everyone. Thanks for taking my questions.

Speaker 3: Jeff, I want to just kind of follow up on the new speed item. Given your kind of record, do you think levels and the others, can they remain at?

Jeff I wanted to just kind of follow up on the news feed item.

Given your kind of record usage levels.

Hello.

Hello level for it.

How should we think about the impact on the total return.

Talks about any of those numbers.

With some of the results for your customers.

I would imagine that there's probably some natural correlation.

Yeah.

Speaker 5: Yes, Scott, I'm not certain I heard all of what you had to say there, but the short answer is you're right. With increased engagement on our on our news products, we are seeing terrific returns on our ROI and ROAS, return on ad spend studies. And in fact, this past quarter, we had a higher than our median, which we had denounced it being ten to one. So we're seeing continued increases in our return on investment for our customers.

Yes, Scott I'm not sure I heard all of what you had to say there, but the short answer is yes.

Right with increased engagement on our on our news products.

We are seeing terrific returns on our ROI in.

<unk> return on AD spend studies.

And in fact, this past quarter, we had a higher than our median which we had announced it being 10 to one.

So we're seeing continued increases in our return on investment for our customers.

Great and then from a follow.

No.

No.

Speaker 8: or...

Your self service portal.

Reduce your sales and marketing spend.

Over the long term as customers use that Laurent didn't know.

Correlations with sales commissions et cetera.

Impacted there.

I'm kind of going with it I didn't know.

That changed in the business here going forward, if that actually you could drive some upside to your long term EBITDA margin if that does right now sales and marketing, which would be probably in the model.

Yeah.

Speaker 4: Sure, Scott. So for our new our new pharma client portal, we aim to be high touch and high tech. So we absolutely will continue having our white glove service and also continue to, you know, meet our customers where they are and allow them to have real time reporting and more real time access to buying on our platform. Theoretically, over time, we will continue to focus on efficiency as a business and.

Sure Scott so for our new pharma client portal, we aim to be high touch and high Tech. So we absolutely will continue having a white glove service and also continue to meet our customers, where they are and allow them to have real time reporting and more real time access to buying on our platform a theory.

Over time, we will continue to focus on efficiency as a business and yes that could make our sales and marketing as a percent of revenue decrease but we're also going to continue to invest in the platform. So we could see some increase net there from an R&D perspective so.

Speaker 4: Yes, that could make our sales and marketing as a percent of revenue decrease, but we're also going to continue to invest in the platform so we could see some increase.

Speaker 4: Net there from an R&D perspective. So I want to get ahead of our skis there as far as increased margin. I think 45% plus margin is something that we are very proud to be guiding to. But we are going to be remaining this high touch and high tech business as we launch this client.

Want to get ahead of our skews there as far as increased margin I think 45% plus margin is something that we are very proud to be guiding to what we are going to be remaining this high touch and high tech business as we.

Launch this client portal.

Okay.

Got it very helpful. Thank you.

Speaker 1: Your next question comes from the line of Elizabeth Anderson from Evercore ISI. Please go ahead.

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

Speaker 9: Hi there, this is Samir Patel on for Elizabeth Anderson. Congrats on the quarter, guys. Anna, you mentioned that you left the 4Q guide a bit wider for business that wasn't yet contracted. Could you give us some color on how much of the full year guide is booked to date?

Hi, This is Samir Patel on for Elizabeth Anderson, Congrats on quarter guys.

And you mentioned that you left the <unk> guide a bit wider for.

Business that wasn't yet contracted.

Can you give us some color on how much of the full year guide is booked to date.

Okay.

Speaker 4: Sure, happy to talk about that. So as we sit here today, we're really just have renewals left to book. So we've kind of gotten through that that mid year and year end up sell cycle for the most part. You know, you can see in our results in our step up in Q3 that that actually ended very positively for us. So we did see some strong growth over the past 90 days here. As we look ahead to Q4, most of that stemming from renewals, you know, as I mentioned in my prepared remarks.

Sure happy to talk about that so as we sit here today.

We're really just renewals left to book, so we've kind of gotten through that that mid year on year and up sell cycle for the most part.

You can see in our results and our step up in Q3 that actually ended very positively for us. So we did see some strong growth over the past 90 days here as we look ahead to Q4 most of that stemming from renewals as I mentioned in my prepared remarks, we are taking a more prudent approach here to how we guide on that portion of our revenue not yet booked just given.

Speaker 4: We are taking a more prudent approach here to how we guide on that portion of our revenue not yet booked, just given the continued macro uncertainty. But we feel really good about where that number is for now. We are taking a more prudent approach here to how we guide on that portion of our revenue not yet booked.

The continued macro uncertainty, but we feel really good about where that number is for now.

Speaker 9: Got it. Appreciate that. And then one quick question, just looking at your 3Q guide, looks like you're kind of, you kind of mentioned it, you're guiding to EBITDA margin of like around 48%. I guess my question first is, should we see another step down in OPEX on a dollar basis in 3Q? And then related to that, I guess, what is keeping the year-over-year margin relatively flat given the recent restructuring?

Got it I appreciate that and then one quick question just looking at your <unk> Guide.

Can you kind of you.

You kind of mentioned that you're guiding to EBITDA margin. If it was like around 48% I guess my question first is should we see another step down in Opex on a dollar basis in <unk> and then related to that I guess, what is keeping the year over year margin relatively flat given the recent restructuring.

Sure So Q.

Q3 is our largest sales quarter clients are deploying about 65% 70% of their annual budgets in Q3. So it then.

Speaker 4: You know, clients are deploying about 65 to 70% of their annual budgets in Q3. So it, in the end, becomes our largest bonus in commissions quarter as well. So you typically will see a step up in opX between Q2 and Q3. And we expect that to be similar this year. You know, as I mentioned before, we're also continuing to invest in our business and our new client portal. And even with this investment that we're seeing, we're guiding to record margins in Q3. So this over 48% margin is a record margin for us in Q3. And we feel really good about where he does.

Becomes our largest bonus and commissions quarter as well. So you typically will see a step up in opex between Q2, and Q3 and we expect that to be similar this year as I mentioned before we're also continuing to invest in our business and our new client portal and even with this investment that we're seeing and we're guiding to record margins in Q3, so thats over 48.

Percent margin is a record margin for us in Q3, and we feel really good about where ebitdas.

Got it I appreciate it thank you.

Speaker 1: Your next question comes from the line of Jessica Tassin from Piper Sandler. Please go ahead.

Your next question comes from the line of Jessica <unk> from Piper Sandler. Please go ahead.

Speaker 10: Hi, guys. Thanks for taking the question and congrats on the really exceptional results. I wanted to ask just about the robust growth and productivity suite users. Can you help us understand if outside of point of care, are you guys monetizing those users with things like education embedded in scheduling? Or are the point of care tools just driving more utilization of the news?

Hi, guys and thanks for taking my question and congrats on the really exceptional results.

Wanted to ask just about the robust growth in productivity suite users and can you help us understand if outside of point of care you guys monetizing those users of things like education embedded in scheduling or.

Or the point of care tools, just driving more.

Thank you Anthony.

Speaker 5: Yeah, Jeff, this is Jeff. So yeah, I'll speak to that. Short answer is, within our workflow suite, we do have LinkedIn to our newsfeed. And as we've discussed with our point of care products, we also have moments where people are having to wait for a reply for someone paging another doctor. And that's a perfect moment to have an educational piece about a product or about a market. So I'd say we are monetizing across our full suite.

Yes, Jeff This is Jeff so I'll speak to that short answer is yes within our workflow suite, we do have links into our news feed and as.

As we've discussed with our point of care products. We also have.

Moments, where people are having to wait for a reply for someone paging, another doctor and Thats a perfect moment.

To have an educational piece about a product or about a market. So I'd say, we are monetizing across our full suite.

Speaker 5: So hopefully that answers your question. I'll just share that, you know, we did just do our annual pharma client event in New York. Had a record turnout, 130 clients came. And I'd say it was great because they got to hear from some of our physicians at this event and really just hearing how doctors are using us in their workflow every day has been a real differentiator for us in the market.

So hopefully that answers your question I'll just share that we did.

Do our annual pharma client event in New York had a record turn out of 130 clients came.

It was great because they've got to hear from some of our physicians at this event and really just hearing how doctors are using us in their workflow every day has been a real differentiator for us in the market.

Yeah.

Speaker 10: That's really helpful. My follow-up is just of the subscription growth that came from existing customers year-to-date, I think it was about $19 million based on the Q, can you just break this down a little bit? Is Doximity playing a bigger role in content creation or targeting, or is this primarily just more campaigns, more modules, more impressions? Thanks and congrats again.

That's really helpful. My follow up is just on the subscription growth that came from existing customers year to date I think it was about $19 million and based on the Q can you just break that down a little bit. So is doximity, playing a bigger role in content creation or targeting or is this primarily just kind of more campaigns more module.

We'll have more impressions and thanks and congrats again.

Speaker 4: Sure, happy to take that one Jess. So, you know, as I mentioned before, we had a strong end to our mid-year, year end up self-cycle. And so we've seen some strong growth here for the past 90 days.

Sure happy to take that one Jeff So as I mentioned before we had a strong end to our midyear yearend upsell cycle and so we've seen some strong growth here over the past 90 days a lot of that comes from increases that we've seen from our largest customers. So as you heard me mentioned on the call and one that we.

Speaker 4: A lot of that comes from increases that we've seen from our largest customers. So, as you heard me mention on the call, and one that we think is really indicative of the health of our business is the increase we've seen in the number of million dollar customers, which is up 28% year over year. So now we have 51 million dollar plus customers. These are customers that are adding brands, they're adding modules, they're adding audience members.

<unk> is really indicative of the health of our business is the increase we've seen in the number of million dollar customers, which is up 28% year over year. So now we have $51 million plus customers. These are customers that are adding brands theyre, adding modules, they're adding audience members and.

Speaker 4: And we believe that growth that we're seeing amongst our largest customer cohort is indicative of the value of our platform, irrespective of the near-term macro headwinds.

We believe that growth that we're seeing amongst our largest customer cohort is indicative of the value of our platform irrespective of the near term macro headwinds.

Okay.

Thanks again.

Speaker 1: Your next question comes from the line of Eric Purtur from Neffron Research. Please go ahead.

Your next question comes from the line of Eric Percher from Nephron Research. Please go ahead.

Speaker 11: you. A question on the long-term guidance and I think I understand that it's primarily the duration of cyclical headwind not a change to the total opportunity. Does that change your perspective on how you allocate R&D or R&D priorities over the next 12 to 24 months and obviously this plays into the change in R&D focus from physician to client? How does all that layer in?

Thank you a question on the long term guidance and I think I understand that it's primarily the duration of cyclical headwind not a change to that total.

Opportunity does that change your perspective on how you allocate R&D our R&D priorities over the next 12 to 24 months.

Obviously this plays into the change in R&D focus from physician to client how does all of that layer in.

Speaker 5: Erranger, this is Jeff, I'll take that. I think you're right. I mean, at a macro level, this is really just a more caution among.

Yeah. Richard This is Jeff I'll take that I think youre right I mean at a macro level. This is really just a more caution longer.

Speaker 5: viewpoint on our end. And, you know, as I mentioned in our prepared remarks, we fully, fully expect to be a billion dollar company and getting there by 2028 will remain an internal stretch goal for us. Sorry, Eric.

Viewpoint on our end.

And as I mentioned in our prepared remarks, we fully fully expect to be a $1 billion company and getting there by 2028 will remain an internal stretch goal for us I'm sorry, Eric.

Speaker 3: And I just want to repeat that we'll continue to aggressively invest in the business.

And I just want to repeat that we will continue to aggressively invest in the business.

Speaker 3: There's a lot of new TAM to go after in peer-to-peer, rep enablement, point of care. We'll continue to take share in our core markets with hospitals and with pharmaceutical companies. So we think we're in a great position and we're still leaning in and investing in R&D. So these macro...

I think theres a lot of.

New Tam to go after and peer to peer Rep enablement point of care.

We will continue to take share in our core markets with hospitals and with with pharmaceutical companies. So we think we're in a great position and we are still leaning in and investing in R&D.

So these macro.

Speaker 5: you know, more caution, longer amongst our clients, we view as an opportunity for us to, I think to continue to step up in the market relative to other.

Yes.

More caution longer amongst our clients, we view as an opportunity for us to I think to continue to step up in the market relative to others.

Speaker 11: And then follow up just on giving the strong EBITDA result on the cash flow. I heard the commentary on tax, but I wanted to make sure I understand relative to the increase in prepaid expenses and accounts payable. Has there been a change in your outlook for cash flow conversion over the course of the year?

And then a follow up just given the strong EBITDA result on the cash flow I heard the commentary on tax.

To make sure I understand relative to the increase in prepaid expenses and accounts payable has there been a change in your outlook for cash flow conversion over the course of the year.

Speaker 4: So historically we've seen free cash flow roughly near EBITDA on a trailing 4 to 6 quarter basis. And so that has not changed. But what has changed is that we are through our NOLs and we are impacted by the newer tax rules around R&D capitalization. So what has changed is what our cash tax rate is. So now we're expecting free cash flow to be below EBITDA by the magnitude of whatever that cash tax rate may be.

So historically, we've seen free cash flow roughly mirror EBITDA on a trailing four to six quarter basis, and so that has not changed but what has changed is that we are through our Nols and we are impacted by the newer tax rules around R&D capitalization. So what has changed is what our cash.

<unk> tax rate is so now we're expecting free cash flow to be below EBITDA by the magnitude of whatever that cash tax rate may be.

Okay.

Okay. Thank you.

Speaker 1: Your next question comes from the line of Scott Showin' House from Keybank. Please go ahead.

Your next question comes from the line of Scott <unk> from Keybanc. Please go ahead.

Speaker 11: Hi team, thanks for taking my question. So Anna, you mentioned you're having a lot of success with a million dollar customers and you clearly see revenue per $100,000 customer see nice and sequential growth. Can you just provide Eddie color into next year on what's built into these sort of initial assumptions on that cohort and if the programmatic or self-service that you kind of...

Hi team. Thanks for taking my question I know you mentioned youre, having a lot of success with <unk> million.

Customers and you've clearly seen revenue per 100000 customers.

Customers see a nice sequential growth can you just provide any color into next year and what's built into the sort of initial assumption on that cohort and if the programmatic or self service.

That you kind of weak and invested in we should have.

Speaker 12: Week and and invested in we should, you know, built into the assumptions next year is a higher mid year upsell. Thanks.

Built into assumptions next year as the higher mid year upsell.

Speaker 4: Sure, you know, like we've said before, especially in this environment, we believe that our top customers will continue to lead our growth. So that cohort of million dollar plus customers. It's been evident as you look at our NRR of our top 20 of 119% plus.

Sure Michael.

We've said before especially in this environment, we believe that our top customers will continue to lead our growth so that cohort of $1 billion plus customers. It's been evident as you look at our <unk> of our top 20 of 119% plus so we have had had strong success. There as we go forward just too.

Speaker 4: So we have had strong success there. As we go forward, it's just too soon for us to comment on what we think fiscal 25 or beyond will look like. We are really encouraged by the recent momentum we've seen in the business. But at the end of the day, we are still facing cyclical headwinds and market budget growth. So while we remain committed to outperforming the market, we just aren't yet sure exactly what that growth rate is gonna look like.

Soon for us to comment on what we think fiscal 'twenty five or beyond will look like.

We are really encouraged by the recent momentum we've seen in the business, but at the end of the day, we are still facing cyclical headwinds and end market budget growth. So while we remain committed to outperforming the market.

We just aren't yet sure exactly what that growth rate is going to look like.

Okay great.

Speaker 1: Your next question comes from the line of Stan Berenstein from Wells Fargo Securities. Please go ahead.

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

Speaker 11: Hi, thanks for taking my questions. Maybe first, can you give us an update on the ROI for ad campaigns for both pharma?

Hi, Thanks for taking my questions. Maybe first can you give us an update on the ROI for asking teams.

For both pharma and health systems.

Speaker 5: Yeah, it was higher this last quarter than it had been previously and we said previously our median was a 10 to 1 reach.

Yes, it was higher this last quarter than it had been previously.

<unk> said previously our median was a 10 to one return soon.

Okay got it. Thanks, So maybe one quick one here just in terms of preliminary guidance.

Speaker 11: Got it. Thanks. And maybe one quick one here. Just in terms of preliminary guidance. I need just mentioned, you know, macro-edulence-oppression budgets. Is that, you know, showing up as impacts on volumes or is there a price component that's showing up as well?

You just mentioned macro headwinds are pressuring budgets.

It's showing up as impacts on volumes or is there a price component, that's showing up as well.

Speaker 4: Sure, you know, once again too soon for us to comment on.

Sure once again too soon for us to comment on next year and what that's looking like we're in the middle of our annual buying cycle with our customers from a pricing perspective in this environment. We are baking in lower assumptions than typical for price increases one thing we are excited about especially with the <unk>.

Speaker 4: next year and what that's looking like, we're in the middle of our annual bi-nti-kel with our customers.

Speaker 4: From a pricing perspective, you know, in this environment, yeah, we are baking in lower assumptions than typical for price increases.

Speaker 4: One thing we are excited about, especially with the client portal, is we believe the real-time ROI reporting and analytics that are provided in that portal will ultimately allow us to continue to raise prices nicely. But in this environment with the macro headwinds, we're just not leaning too aggressively into pricing right now.

<unk> portal as we believe the real time, ROI reporting and analytics that are provided in that portal will ultimately allow us to continue to raise prices nicely.

But in this environment with the macro headwinds or just not leaning too aggressively into pricing right now.

Thanks, so much.

Speaker 1: Your next question comes from the line of Craig Hettenbach from Morgan Stanley . Please go ahead.

Your next question comes from the line of Craig Hudson back from Morgan Stanley. Please go ahead.

Speaker 9: Thank you, and nice to see the really strong EBITDA performance. You have to think about the prior target of 20% keg or, you know, in the intermediate term, is there a range that you think is kind of appropriate to where you see the market over a more intermediate term basis?

Yes, Thank you and nice to see the really strong EBITDA performance, Jeff If we think about the prior target of 20% CAGR.

Immediate term is there a range that you think is kind of appropriate of where you see the market over a more intermediate term basis.

Speaker 3: Yeah, hi Greg, good to hear from you. Yeah, really just too soon. Again, this is more caution longer, I think, is what we're seeing in the end marketplace.

Okay.

Yeah, Hi, Greg good to hear from you yes.

It really just too soon again this is more caution longer I think is what we're seeing in the marketplace from our clients and.

Speaker 3: Again, our ROI remains strong, our engagement remains very strong. One thing I haven't mentioned that we mentioned in the last call was about 90% of our R&D was physician-focused, and I think we've had a lot of success in this last quarter. We've got a lot of our R&D team that are very excited now to work on client problems, and so we're seeing that mix shift, and I think our clients are really pleased with the high tech motion we're offering. But again, I think too soon to comment on that midterm growth.

Again, our ROI remained strong our engagement remains very strong you know one thing I haven't mentioned that we mentioned in the last call was about 90% of our R&D was physician focused and I think we've had a lot of success in this last quarter. We've got a lot of our R&D team. They are very excited now to work on client problems and so we're seeing that that much.

Mix shift and I think our clients are really pleased with the high Tech motion we're offering.

But again I think too soon to comment on that that mid term growth rate.

Okay.

Speaker 9: Got it. And then just a quick follow up on the video product. How do you think about that into next year as it layers into the business and any kind of signposts to watch for in terms of adoption in the marketplace?

Got it and then just a quick follow up on the video product. How are you thinking about that into next year as it layers into the business and then they kind of signpost to watch for in terms of adoption in the marketplace.

Speaker 3: Well, I'll tell you, Craig, one of the cool things about bringing in all this IQVIA data and now being able to run the

Well I'll tell you Craig one of the cool things about bringing in all of this IQ via data and now being able to run these more real time Roy analyses as we are able to start to look at what content types.

Speaker 3: more real time ROI analyses is we are able to start to look at what content type.

Speaker 3: really generate incremental, inter-ex-lith, they call it sales for our clients.

Really generate incremental interacts lift they call it sales for our clients and Thats a window, we'd never had before because before we've always done these year long look backs.

Speaker 3: And that's a window we've never had before, because before we've always done these year-long look-backs.

Speaker 3: and haven't had to kind of real-time data to look at it all. And the short answer is, is video is hot. Video does very well at communicating messages, engaging doctors, and ultimately changing behavior. And that's great news for us because with our point-of-care telehealth product, we have a lot of video inventory. So we're excited to lean more into that whole go-to-market notion this year.

Haven't had the kind of real time data to look at it all and the short answer is video is hot video does very well.

Communicating messages engaging doctors and ultimately changing behavior.

And that's great news for us because with our point of care Telehealth product, we have a lot of video inventory. So we're excited to lean more into that hole.

Go to market motion this year.

Alright, thank you.

Speaker 1: Your next question comes from the line of gel and dressing from truest security. Please go ahead.

Your next question comes from the line of Joanne dressing from <unk> Securities. Please go ahead.

Speaker 13: Thank you and thanks for taking my questions and congrats on a strong quarter. My first question, I mean last quarter you guys called out some market share losses to cheaper banner ads kind of platform. Just wondering if any of those trends moderate or reverse this quarter and what have been the drivers? I believe you have talked about that. Some of that could have been because of lack of an automated online purchase platform. I'm just curious that how trends were three months later.

Okay. Thank you and thanks for taking my questions and congrats on a strong quarter.

My first question I mean last quarter, you guys called out some market share losses to a cheaper banner ads.

Im just wondering if any of those trends moderate or they're worse this quarter than what had been the drivers I believe you have talked about that.

Some of that could have been because of lack of an automated online purchase biopharma just curious that.

How trends.

Three months later.

Speaker 3: Yeah, thanks, Jolendra. Yeah, so, you know, per our 1% guidance raise, we're obviously pleased with the sales momentum we've seen since then, our close rates, we're up in Q2, as Anna has already mentioned. I'll go back to that 130 clients.

Yes, Thanks Sheila.

So per our 1% guidance raise.

We're obviously pleased with the sales momentum we've seen since then or close rates were up in Q2 as and as already mentioned.

I'll go back to that 130 client.

Speaker 5: day-long event we had in New York recently, we did get a lot of good feedback from there. And with regard to some of these new competitors, I will say the third-party reports they're running are finding issues with their quality and their ROI. And I think that that has moderated, I think, some of that competitive threat. You know, the joke is that IP address targeting often reaches the doctor's daughter, not the doctor. And that is raising a lot of questions about whether there's real ROI here. Okay, that's helpful.

Daylong event, we had in New York recently, we did get a lot of good feedback from there and with regard to some of these new competitors I will say the third party reports, they're running are finding issues with their quality and their ROI.

And yes, I think that that has moderated I think some of the competitive threat.

The joke is that IP address targeting orphan reaches the doctor's daughter, not the doctor.

And that is raising a lot of questions about whether theres real ROI here.

Okay. That's helpful and then my follow up.

Speaker 13: One of the insurance company, Atma, they recently announced I know making some changes around reimbursement for some of the virtual care and audio coverage reimbursement.

One of the insurance company at the recently announced I know, making some changes around reimbursement for some of the <unk> audio coverage reimbursement.

Speaker 13: And as always, in the case that generally other insurance also follow the trend, our skew is what feedback have you got from your providers since that announcement? And how should we think about the provider usage of doximity platform? Clearly, you have a lot of tools of providers, but Dialer app is one of the critical tools you guys have for your provider clients. The skew is like what's the feedback from them?

As always is the case that John any other insurance also followed a trend I was curious what feedback have you got from Europe to provide those things that announcement and how should we think about the provider usage doximity back I'm clearly you haven't got off to a soft providers, but dial it up as one of the critical tools you guys have for your provider clients.

Curious like what's the feedback from them.

Speaker 14: Angelinda, this is Nate. That's a great question. I think if you are looking at some of the recent moves in the payer space.

Hey, Julien this is Nate.

Great question I think if you are looking at some of the recent moves in the payer space.

Speaker 14: That's dictated more by the business realities of those payers and

Congrats dictated more by the business realities of those Payors and.

Speaker 14: is less so at this point a broader trend in medicine. I think we're seeing there's still a lot of legislative, patient and doctor support for telehealth as sort of a new normal for certain types of care delivery. I think all parties who use it like it in the right circumstance. And so we believe telehealth is here to stay and I think our numbers on the engagement side of our platform reflect that.

It's less so at this point a broader trend in medicine, and I think we're seeing there's still a lot of legislative patient and doctor support for telehealth as sort of a new normal for certain types of care delivery, Oh, I think all parties, who use it like it in the right circumstances.

We believe telehealth is here to stay and I think our numbers on the engagement side of our platform reflects that that said every year not just in telehealth physicians face decreases and cuts to their compensation and to what they can bill for and how much they can do for them.

Speaker 14: That said, every year, not just in telehealth, physicians face

Speaker 14: decreases and cuts to their compensation and to what they can bill for and how much they can bill for.

They are increasingly asked to see more patients and see more patients efficiently and so well not every patient and not every type of carrier is going to be a perfect fit for telehealth.

It's going to be up to the technology community and those working with doctors to come up with solutions that can make it as seamless and easy and lightweight as possible because when the economy and when physicians are the straps. That's that's the only way we're going to be able to deliver a product that works for everyone. So we're thrilled that our engagement is at an all time high.

If you look at.

Just a D au daily active use switches really theirs.

Workflow tools of which telehealth is our crown jewel led the charge and grew the most in the last quarter.

Great. Thanks, a lot.

Speaker 1: Your next question comes from the line of Jack Wallace from Guggenheim Partners. Please go ahead.

Your next question comes from the line of Jack Wallace from Guggenheim Partners. Please go ahead.

Speaker 15: It takes for taking my questions and threats and a quarter. And in your comments, you mentioned that there is a little extra budget on lock. Part of the reason for the piece of the guide is, you know, I realize it's a stalk cohort, but is there any part of that that's related to the...

Hey, Thanks for taking my questions and congrats on the quarter.

And in your comments.

You mentioned that Theres, a little extra budget unlock.

Part of the reason for the guide.

Yeah, I realize it's a small cohort, but is there any part of that that's related to the other.

Speaker 15: self-service portal and it sounds like the hope might be that that would be the case going for it but is there any extra Unlock tied to the self-service portal in the guide?

Self service portal and it sounds like the hope might be there.

That would be the case going forward, but is there any extra unlock tied to the self service portal.

Got it thank you.

Speaker 4: Sure, Jack, happy to take that question. The short answer is not yet. I think we're really excited about the unlock that that could bring for next year potentially, but really what we've seen over the past 90 days is like many other industries, we've just seen elongated sales cycles in this environment.

Sure Jack happy to take that question. The short answer is not yet I think we're really excited about the unlock that that could bring for next year potentially but really what we've seen over the past 90 days is like many other industries. We've just seen elongated sales cycles in this environment. So those incremental dollars that we tip.

Speaker 4: So those incremental dollars that we typically start seeing being added to our platform in June didn't really start coming in until August of this year. But since August , I think that's where we're really encouraged by the strong growth we've seen here over the past 90 days as our customers are adding on to their high ROI programs.

We start seeing being added to our platform in June didn't really start coming in until August of this year, but since August I think that's where we're really encouraged by the strong growth. We've seen here over the past 90 days as our customers are adding onto their high ROI programs. So a lot of this has really been budget driven but for next.

Speaker 4: So a lot of this has really been budget-driven, but for next year, we're very excited by what self-serve can bring, but it's just too soon to put numbers behind it.

Here, we're very excited by by what self serve can bring but it's just too soon to put numbers behind us.

Speaker 15: Thank you, that's helpful. And then for the recently launched products or...

Thank you that's helpful and then for the recently launched.

Products are.

Speaker 15: Maybe start those in the planning. You're noticing any changes in your customers.

Some of those in the planning are you noticing any changes in your customers.

Yes.

Speaker 15: appetites for supporting those launches any slower or faster just given the current environment.

Appetites for supporting those launches.

Slower faster just given the current environment.

Yeah.

Speaker 3: Yeah, this is Jeff. I'll take that. I sure the answer is, you know, there's a lot of interest in innovation in what we're doing, but I'd say also in this more cautionary macro environment, there's a flight to quality around higher or more programs that have had proven results. And again, from our end, that's great because this is the time of year when our clients sit down, they look back on the year, they look at all the numbers, they do the math, they do the ROI and we're one of their key, if not.

Yes. This is Jeff I'll take that short answer is.

There's a lot of interest in innovation and what we're doing but I would say also in this more cautionary macro environment. There is a flight to quality around high ror programs that have proven results.

And again from our and that's great. Because this is the time of year when our clients sit down and look back on the year. They look at all the numbers they do the math.

Do the ROI and we're one of their key if not.

Speaker 3: They're absolute key digital HCP partner. So I wouldn't say that there's this strong drive towards experimentation in this market, like maybe there was in 2021. And I would argue that's actually good news for us, because in 2021 that meant there was a lot of digital dollars thrown at new websites and other things that frankly just didn't work that well.

They are absolute key digital HCP partner so.

I Wouldnt say that Theres, a strong drive towards experimentation in this market like maybe there wasn't 2021 and I would argue that's actually good news for us because in 2021 that meant there was a lot of digital dollars thrown at new websites and other things that frankly, just didn't work that well.

Okay.

Okay. Thank you.

Your next question comes from the line of Alan <unk> from Bank of America. Please go ahead.

Thanks for taking the question.

I guess this one for Jennifer.

The point of care offering.

Sort of introduced intra year this year so.

So I'm curious as you think about because most of your business as long as annual part of the annual budget cycle do you expect to see a step up in point of care revenue.

In your fiscal <unk> calendar <unk>, and then related to that is there any way to frame how much point of care revenue is embedded in that <unk> got.

Sure. This is Jeff I'll take that Ellen and EMEA add some some color.

The short answer is our point of care is doing really well fundamentally because it's a video product. So as I mentioned earlier that ability to have engaging video thats 2030 seconds long our watch rates. When doctors are just sitting there waiting for the patient to join the call which is a lot of minutes every month is a really great time to.

Our reach doctors and to get that engagement that said it's typically.

It's playing out that it's selling to get better with our broader programs and.

And our client portal will actually reinforces and again bring all of this data and all the results back together into one place.

So.

Candidly is a little difficult to point to our success in point of care discretely from our news feed because they are both doing super well and Theyre typically again being sold as a bundle so with regard to our guidance I guess I would defer to Ana, but I'd just say overall video engagement, which is what our point of care product is.

That's been a real hit yeah, and as far as what we have embedded in our Q4 guidance I would say not much from that perspective, because we're thinking about launch timelines we're sensitive to the time. It takes to get these products are created and live and so from our perspective, we're not counting on big ramp there at all in Q4.

Yeah.

Got it thank you very much.

Your next question comes from the line of Glenn SMT Angelo from Jefferies. Please go ahead.

Hi, yes, thanks for taking my question, Hey, Jeff I, just wanted to follow up on some of the comments that you made regarding the macroeconomic climate you said that your clients seemingly are less willing to drive towards experimentation I'm trying to get a sense for maybe I mean, it seems like its benefiting you in this environment and so I'm trying to get a sense for.

Maybe overall market growth I think Anna falling up on your remarks, you said that you all feel comfortable that you'll be able to grow faster than the market and I'm trying to get a sense for.

This year, how fast is the market growing clearly, we're not seeing digital outperform.

The overall marketing budgets by as much as they were during the pandemic, but I'm sure, it's still growing faster and I'm, just trying to get a sense in.

In the current environment with the competitive landscape of probe programmatic DTC DTP like where is the market growth today, you think in your mind, sorry, there's a lot to that question. So.

However, you want to handle it.

Great. Glenn This is Jeff I'll take a first crack.

So first I'll say pre Covid pharma health care spend.

By our estimates and IDC and others about 17% of their marketing budgets.

Digitally on digital programs, which is way under.

The fortune 500 or or general industry norm at that time I think during Covid. There was some catch up it grew faster. Our current estimate is that it's probably half of the 75% that the.

Fortune five hundreds so in the mid <unk> in terms of what percent is spent digitally.

But there is a bit of a reversion to the mean as we come out of post COVID-19 here.

And again I would say overall the general approach to all things. These days is just more caution at the macro level.

Given.

Given that our clients could invest that money at low risk at high rates. These days as well instead of investing in our marketing again over time that will shake out and when we're delivering a 10% return for our.

Our clients will see more come our way.

But youll see probably less of that experimentation those new websites that were tried out during COVID-19.

That didn't have any return.

So I don't know Anna.

Yeah, So specifically to your question Glenn around market growth and what we said on our August call is that we believe market. The market. This year grew maybe mid to high single digits and as far as our expectations for next year just given the continued macro headwinds. We think next year will look roughly similar to this past year, where do you think.

This is more of a near term phenomenon to Jeff's point, we are contending with a post COVID-19 reset and then a macro downturn I do think over time, there will be a reversion to the mean upwards, but just for where we are right now in this macro climate, we're assuming the growth rate remains similar to what we saw this last year.

Okay. Thank you.

Your next question comes from the line of David Larsen from <unk>. Please go ahead.

Hi, congratulations on the good quarter.

Hearing.

The 10 to one return for a long time, but I think what I've heard that's new this quarter is a tighter integration with our key via the ability for clients to actually run the data themselves and look at that I think through their client portal.

Is that correct and can you maybe just provide a little more color around did I hear that correctly that they can see the real time Roy.

Self service way is that new.

David that's right that is new and again this is out in beta right now something that we expect to make available to all of our pharma clients early next year, but I think it's a big unlock youre absolutely right. Its something that we've seen in our hospital business has been a big difference maker. So in our hospital business. We've been doing this now for a year or two where we've been able to <unk>.

Our clients these quarterly refreshes of their referral data and show them what their ROI wasn't it's interesting. The first time you do it it's a 45 minute call with a lot of statistical questions. The second time, we do it at the half hour call and then the third time, it's just an email and it's a reminder to our clients that are of the value.

We provide them right now historically.

What we've done for our clients is more of a once a year look back.

Which obviously isn't as frequent and isn't as top of mind. So I do think it will be a big unlock for us to make this data just more available and more transparent to our clients.

Yes, I think there's enormous value in that they can see the ROI right away. So why not invest more especially in a tough economy and then did I did I also hear you say something about.

Insurance approvals for certain drugs or do you have a solution in that area or not.

We're working on it David So we did announce that we have our docs GPT product.

It was launched back in February of this year, we announced last quarter that we had our first health system clients for it. So these are top hospital systems paying to get their doctors and their back office staff access to tools to help them write insurer appeal letters and of course pharma would love to make that better and easier as well and they have.

Whole content libraries.

That we can feed in that provide better insurance appeal letters to make sure that patients get the medications they need.

Okay. Thanks, very much appreciate it congrats on a good quarter.

Thanks.

And we have no further questions in our queue at this time I will turn the call back to Jeff for closing remarks.

Great.

And if I just thinking the entire doximity team for their hard work this quarter and serving more doctors everyday than never before.

Thank you everyone for joining.

Yeah.

This concludes today's conference call. Thank you for your participation and you may now disconnect.

Okay.

Yeah.

Yeah.