Q3 2025 Doximity Inc Earnings Call
Welcome to Doximity as fiscal 2025 third quarter earnings call all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session and if you would like to ask a question. During this time. Please press star one on your telephone keypad.
Perry Gold: I would now like to turn the conference over to Perry Gold Investor Relations you may begin.
Speaker Change: Thank you operator, Hello, and welcome to <unk> fiscal 2025 third quarter earnings call with me on the call today are Jeff Tangy co founder and CEO Doximity, Dr. Nate gross co founder and CSO and enterprise and CFO, a complete disclosure of our results can be found in our press release issued earlier today as well as in our <unk>.
Speaker Change: <unk> form 8-K, along with a copy of our prepared remarks, all available on our website at investors Dot Doximity Dot com as a reminder, today's call is being recorded and a replay will be available on our website as part of our comments today, we will be making forward looking statements. These statements are based on management's current views XP.
Speaker Change: Patients and assumptions and are subject to various risks and uncertainties actual.
Speaker Change: Actual results may differ materially and we disclaim any obligation to update any forward looking statements or outlook.
Speaker Change: Please refer to the risk factors in our annual report on Form 10-K, any subsequent form 10, Qs and any other reports and filings with the SEC that may be filed from time to time, including our upcoming filing on Form 10-Q.
Speaker Change: Forward looking statements are based on assumptions that we believe to be reasonable as of todays date February six 2025.
Speaker Change: Note that as Dr. <unk> 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 Change: 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 insight into the dynamics of our business. These details maybe onetime in nature.
Speaker Change: And we may or may not provide updates on these metrics in the future.
Jeff Tangy: I would now like to turn the call over to our CEO and co founder Jeff <unk>, Jeff.
Jeff Tangy: Thanks, Perry and thank you everyone for joining our third quarter earnings call. We have three updates today, our financials network growth and commercial highlights first our topline we delivered $169 million of revenue for the third quarter of our fiscal 2025, which represents 25% year on year growth and a 10% beat.
From the high end of our guidance range of note our top 20 clients. Once again grew the fastest for us up 122% on a trailing 12 month basis. These clients are the largest most sophisticated pharma companies, who employ entire teams of analysts to measure their marketing effectiveness. We believe our continued growth with them.
Jeff Tangy: As proof of our value to the broader marketplace. Our bottom line was also strong in Q3 with a record adjusted EBITDA margin of 61% or $102 million, which was up 39% year on year and 21% above the high end of our guidance. So just two years after our first <unk>.
Jeff Tangy: Order with nine figures in revenue, we've now achieved non figures and adjusted EBITDA.
Jeff Tangy: So thats, our Q3 financial highlights.
Jeff Tangy: 10% beat a 5% raise and 61% margins.
Jeff Tangy: Okay, turning now to our network growth and engagement our unique active users on a quarterly monthly and weekly basis, all hit fresh highs in Q3 with double digit percent growth year on year.
Jeff Tangy: Our news feed usage continued to lead the way for us for the first time ever in Q3 more than 1 million unique active prescribers scrawled our feed to stay current on the latest news in their fields.
Jeff Tangy: Our workflow tools also hit new highs in Q3 with over 610000 unique active prescribers as a reminder, our workflow tools include our telehealth facts scheduling and the AI tools, our AI tools grew the fastest in Q3 with over one 8 million prompts.
Jeff Tangy: 60% over the prior quarter.
Jeff Tangy: Finally for the fourth year in a road doximity as earn the vaunted number one best in class Telehealth video platform by health systems and their staff outperforming Microsoft teams zoom and many others. We're now proud to serve over 250 health systems and hospital clients and delivering telehealth.
Jeff Tangy: Care to their patients in.
Jeff Tangy: In short our network engagement has never been stronger as health care shifts to be more digital more mobile and more AI powered we're proud to be leading the way.
Jeff Tangy: Okay, turning now to our Q3 commercial highlights we are pleased to report strong calendar year end sales led by three initiatives or new products integrated programs and client portal.
Jeff Tangy: First our new point of care and formulary products grew over 100% in Q3 generating over 20% of our pharmaceutical sales.
Jeff Tangy: As a reminder, these modules appear outside of our news feed and represent an entirely new inventory for us.
Jeff Tangy: Second with our newer integrated programs clients can leverage our data science to create a custom tailored dynamic approach for each Doctor for example, some doctors prefer scientific deep dives on Monday evenings.
Jeff Tangy: Others prefer bullet point guidelines in between patient visits letting our clients personalize and optimize their campaigns across our many modules helped us grow our program sizes in Q3.
Jeff Tangy: Finally, our client portal is leaving all of this together by providing our clients a single trusted place to test strategies and see their results are seamless third party prescription data gives our clients real insights and proof of impact solidifying our role as a strategic partner.
Jeff Tangy: Now as we've said before our client portal is a multi year initiative today over half of our brand clients have access our plan is to add all of our clients. In 2025. We also added agencies to the mix last quarter, signing 10 as portal partners, we will do our inaugural.
Jeff Tangy: Training summit with them in New York later this month.
Jeff Tangy: Together, we're excited to bring consumer grade marketing tools to health care.
Jeff Tangy: Okay I'd like to end by thanking my Doximity teammates, who continue to work incredibly hard to realize our mission to better health care I personally have never been more excited are more proud about what we're building together.
Jeff Tangy: And with that I'll hand, it over to our CFO Bryan to discuss our financials and guidance Anna.
Bryan: Thanks, Jeff and thanks to everyone on the call today third quarter revenue grew to $168 6 million up 25% year over year and exceeding the high end of our guidance range.
Bryan: Similar to prior quarters, our existing customers continued to lead our growth.
Bryan: We finished the quarter with a net revenue retention rate of 117% on a trailing 12 month basis.
Bryan: Our top 20 customers remained our fastest growing with a net revenue retention rate of 122%.
Bryan: We ended the quarter with 114 customers contributing at least $500000 each and subscription based revenue on a trailing 12 month basis.
Bryan: This is a 21% increase from the 94 customers. We had in this cohort a year ago and these customers accounted for 84% of our total revenue.
Bryan: Turning to profitability non-GAAP gross margin in the third quarter was 93% flat versus the prior year period.
Bryan: Adjusted EBITDA for the third quarter was $102 million and adjusted EBITDA margin was 61% compared to $73 3 million and a 54% margin in the prior year period.
Bryan: This represents adjusted EBITDA growth of 39% year over year as we continue to run a very profitable business with high incremental margins.
Bryan: Now turning to our balance sheet cash flow and an update on our share repurchase program.
Bryan: We generated free cash flow in the third quarter of $63 4 million compared to $48 7 million in the prior year period, an increase of 30% year over year.
Bryan: We ended the quarter with $845 million of cash cash equivalents and marketable securities.
Bryan: During the third quarter, we repurchased $19 $2 million worth of shares at an average price of $48 62.
Bryan: We believe repurchasing our shares is a valuable use of the incremental cash we generate above what's needed to reinvest in the business.
Bryan: As of December 31, we had $451 million remaining in our existing repurchase program.
Bryan: Now I will turn to a recap of our annual buying season.
Bryan: As a reminder, our December quarter represents our largest sales quarter by a significant amount.
Bryan: This is what our pharma customers sign on for next year's programs committing the majority of their annual marketing budgets and what are called upfront contracts.
While we signed these contracts in Q3 will primarily recognize revenue over the next 12 months, depending on the timing of program launches.
Bryan: This upfront season, our clients continued to extend their reach across our entire platform or.
Bryan: Our modules that sit outside of the newsfeed point of care and formulary grew by more than 100% year over year combined.
We also sold a large number of programs on a multi module integrated basis, which contributed to much larger deal sizes.
Bryan: Brands buying these integrated offerings grew more than twice as fast as brands behind our modules on a standalone basis.
Bryan: Finally, our upfront season demonstrated that there is still plenty of room for growth among our hundreds of pharma brand partners.
We increased the number of $10 million plus brands to four and had our first ever $15 million plus brand.
Bryan: With record prescriber engagement and continued commercial product innovation, we see ample runway to further scale our partnerships over time.
Bryan: Now moving onto our outlook.
Bryan: For the fourth fiscal quarter of 2025, we expect revenue in the range of $132 five to $133 $5 million, representing 13% growth at the midpoint and.
Bryan: And we expect adjusted EBITDA in the range of $62 five to $63 5 million, representing a 47% adjusted EBITDA margin.
Bryan: For the full fiscal year, we now expect revenue in the range of $564 six to $565 6 million, representing 19% growth at the midpoint.
Bryan: This is an increase of roughly 5% or $28 million at the midpoint after outperforming our Q3 guidance by roughly $16 million.
Bryan: We now expect adjusted EBITDA in the range of $306 six to $307 6 million, representing a 54% adjusted EBITDA margin.
Bryan: This is an increase of roughly 11% or $31 million at the midpoint after outperforming our Q3 guidance by roughly $19 million.
Bryan: Our increased annual outlook is due to a variety of factors.
Bryan: First our pharma year end up sells materially outperformed driving stronger than anticipated Q3 revenue.
Bryan: Our annual buying cycle exceeded expectations due primarily to new product traction in larger multi module integrated programs.
Bryan: Finally, the structure of these integrated programs led to a higher percentage of January launches than prior years.
Bryan: These programs are contracted to start at the beginning of the year with the clients first content improved module.
Bryan: While we're excited to help our customers go live faster. This launch efficiency also means annual upfront sales are converting to Q4 revenue at a faster pace.
Bryan: As a result more of our upfront sales will be recognized as revenue in the current fiscal year than in years past.
Bryan: Looking ahead, we expect the pharma HCP digital market to continue to grow roughly 5% to 7%.
Bryan: While we will provide our fiscal 2026 guidance in May our goal remains to grow ahead of the overall market.
Bryan: Given our strong competitive positioning and record engagement. We believe we are well positioned for another year of share gains.
Bryan: With that I will turn it over to the operator for questions.
Bryan: Thank you.
Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Ask that you please limit yourself to one question and one follow up please.
Speaker Change: Please ensure you are not on speaker phone and that your phone is not on mute when called upon thank you.
Speaker Change: Our first question comes from Brian Peterson with Raymond James Your line is open.
Brian Peterson: Thank you and congrats on a really really strong quarter. So I'd love to get any perspective on the 60% of customers that you have on the portal today that arent on versus those that aren't on the portal is there anything that you could say about how they are kind of mid year and end of year buying patterns compared to those that are.
Brian Peterson: In any telecom commonality in terms of what you saw in terms of their buying into your fiscal year 'twenty six.
Brian Peterson: Okay.
Brian Peterson: Hi, Brian This is Jeff Yes, great question as we said in our last quarterly earnings call. We have seen higher growth from our portal clients and continue to do so.
Brian Peterson: So yes, it's about half of our clients that we've trained on it today and again, we expect to roll out to all of our clients. This year, we've rolled out to our entire sales and service team just a couple of weeks ago. So we're excited to have the portal out in the hands of more folks because it allows them to see our return on investment on a monthly basis right. We're pulling in this IQ via data.
Brian Peterson: That shows them there their share lift in their results and allows them to strategically look at what's working what's not working and make more course corrections along the way.
Brian Peterson: So hope that answers your question.
Speaker Change: Well I appreciate the color, Jeff and maybe one for you just the 60%, 61% EBITDA margins. This quarter, obviously much higher than expected in any way to help kind of balance with our models in terms of how you are thinking about generating incremental profitability versus investing in growth. Thanks guys.
Yeah. Thanks for the question, Brian. So as you noted we did a very strong quarter in Q3 with material upsell performance and given the nature of our business model almost all of that top line outperformance flows through to the bottom line. So I would not take that one quarter and think we're 60% plus.
Speaker Change: And does this now similar to revenue there are quarterly variations to EBITDA. So we encourage you to look at our annual EBITDA margin as the best representation of our business, which is that I'm, sorry, 55, 4% for this fiscal year.
Speaker Change: Thanks Anna.
Speaker Change: The next question comes from Glenn Santana Chiller with Jefferies. Your line is open.
Speaker Change: Yes, Thanks for taking my question, Hey, Jeff I think we're all trying to figure out what's really driving this momentum and I think in your prepared remarks, you said that the new products drove 20% of your sales this quarter, if I, if I heard that correctly and what I'm I guess, what I'm kind of curious about is when you think about these new products and these multi module integrated programs.
Speaker Change: Is that really what's driving the strength or is it more of the fact that you are wrong the portal out to these.
Speaker Change: Your brand partners, obviously these agencies and maybe that's where we're seeing the uptake and I'm guessing that's kind of a combination of both but if you could in any way sort of elaborate on those two dynamics and how they're contributing to your operating momentum I think that'd be helpful.
I think I know, it's a good question and I think it is a one two punch I think that we have here where.
Speaker Change: During the midyear, where budgets are smaller and clients want efficiency I think our portal really shines that's easier to transact and do $100000 quick program with us through our portal, but at the end of year, we've always done well because thats. The one time of year the clients sit down and then they have their half day Budd.
Speaker Change: Planning and partnership meetings and they look at their return on investment.
Speaker Change: Which we traditionally have performed very well and they make their big longer term commitment.
Speaker Change: But I think our integrated programs did particularly well during this past year.
Speaker Change: Year end budget cycle.
Speaker Change: Because our clients realize that we have a lot of insights to doctors and when they work from home and what types of content. They prefer do they like acronym referring to studies or are they more nerdy or do they just won.
Speaker Change: A quick skim the guidelines and the changes.
Speaker Change: We did our pharma Advisory Board last May and I remember the top voted item coming out of that advisory board with with 40 of our clients top clients. There was to help them with these integrated programs and help them.
Speaker Change: Optimize use our AI, our our machine learning to go and optimize their programs for them. So short answer is I think our portal is helping most enduring the upsell season, our integrated programs really helped a lot during this last upfront season.
Speaker Change: Alright, thanks for all the details and congrats Joe and team.
Speaker Change: The next question comes from Ryan Daniels of William Blair. Your line is open.
Ryan Daniels: Yes, thanks for taking the questions and congrats on the outstanding quarter.
Ryan Daniels: Maybe one for you you talked about the larger multi modal integrated programs launching near the start of the calendar year I'm curious how that might change the seasonality of revenue recognition I guess I don't want to get too far ahead of ourselves in our models as it seems like this could change the cadence of quarterly sales a bit versus what we've seen in the past so any color there.
Ryan Daniels: Yes. Thanks for the question Ryan and I will take the opportunity also here can you talk a little bit more about how these programs work, Jeff just hit on it a little bit but as he said our clients expressed an interest in a more flexible and dynamic offering to optimize their programs.
Ryan Daniels: Our multiple formats and channels and so we just started trialing. Some of these multi module integrated programs last upfront season, which we talked about about a year ago, but this year, we rolled out these offerings to a much larger number of our top clients and we saw really great traction and so as far as visibility is concerned. These programs are typically 12.
Ryan Daniels: And link they are contracted to start in January and our contract and just start with whichever module has the first available content. So for example, if a client is buying an integrated program with news video and point of care in it and both the news and video modules have preapproved content, but the point of care does not we will.
Ryan Daniels: Start their program by launching in optimizing the news and video modules, while we work on that point of care content in the background. So our customers love the speed to launch they love the multi module flexibility. This provides.
Ryan Daniels: And then for US, we obviously love the larger and longer deals that are revenue predictability. It really is a win win across the board.
Ryan Daniels: Seasonality I think as we move more customers into these programs, we could certainly see a more consistent revenue curve year to year than we've seen over the past few years and that's definitely our aim as we continue to sell these programs over time.
Speaker Change: Okay Super helpful color and then as a follow up maybe for Jeff or Nate we've seen a lot of data recently about NPS <unk> really starting to write as many as if not more scripts then physicians. So I'm curious if you can talk a little bit about how you target that market I know you've launched.
Speaker Change: N P navigator in October, but just more broadly how do you target <unk> and is that a big growth opportunity or are you already capitalizing there. Thanks.
Speaker Change: Thanks, Brian Yes. This is Jeff I'll answer that question, So we've announced for over 60% of all nurse practitioners in the country.
Speaker Change: Members.
Speaker Change: And we're proud of our growth there in fact, it was one of our internal growth goals this year to keep growing that.
Speaker Change: Percentage.
We just hosted out here, our first ever nurse practitioner Advisory Board, where we had over 100, NPS and to come and tell us about what they want from a product I won't bore you with all of it but I will say they love our workload tool the ability to call patients from their cell phones from wherever they are and the ability to handle factors with.
Speaker Change: Pharmacies, the ability to use our GPT too right patient prior off letters all of those things.
Speaker Change: They are really strong users of and.
Speaker Change: We've done very well with them interestingly they are a little less proud.
Speaker Change: Proud of their resumes the Cds so the more linked in style functionality I think is.
Speaker Change: Not as frequently used by them, but again, our workflow tools.
Speaker Change: <unk> been really popular and we look forward to more growth there.
Speaker Change: Great. Thank you so much.
Speaker Change: The next question comes from Ryan Macdonald with Needham Your line is open.
Speaker Change: Alright, Thanks for taking my questions Ryan on for Scott, You've now had two consecutive quarters of 100% plus year over year growth on point of care and formulary can you just talk about sort of the runway here for these products and maybe what the penetration looks like.
Speaker Change: For the most recent couple of strong quarters here or within the overall customer base. Thanks.
Speaker Change: Sure. Thanks for the question Ryan and Jeff.
Speaker Change: As Jeff mentioned in the prepared remarks, we saw 20% of our.
Speaker Change: Come from new products in the quarter. So we really are starting to see very strong traction there with consecutive quarters of over 100% year on year growth, even though is that I do think we are in the early innings of this opportunity between the engagement, we see in our workflow channels and monetize white space.
Speaker Change: We firmly believe that our workflow modules could become on par with our news feed over the next three to five years and definitely a key driver of our incremental growth.
Speaker Change: Okay.
Speaker Change: Excellent and then maybe as a follow up you noted 10, New agency partners that have been signed up and the training for those I was just going to start here in the next few weeks, how should we think about the continuing of the.
Speaker Change: A ramping process.
Speaker Change: Not only is sort of getting those agency partners trained and sort of kind of more actively using the portal, but then.
Speaker Change: The sort of the magnitude of the ramp of adding incremental agency partners as we look ahead into fiscal 'twenty six.
Speaker Change: Yeah.
Speaker Change: Yes. This is Jeff I'll take that yes, I look forward to our summit coming up in New York City to go through this with our agency partners.
Speaker Change: And yes, they're excited to come to because we make them look tomorrow I mean, all else equal, we're giving them insights that really do help inform their strategies and be more strategic with their end clients, which is a win win really all around.
Speaker Change: I can share you on the last call. We shared that we had had referrals already with six figure new clients that continues in our F&B growth over this past quarter was also stronger than it had been previously so.
Speaker Change: Some of that we do credit to these agency partners.
Speaker Change: Just a couple of weeks ago, we had one of these agency partners bring us.
Speaker Change: A new half a million dollar client, which is great to see and again from our point of view. This is just us helping our agency partners look smart, helping them be more creative develop better creative.
Speaker Change: Today, most of our content is being created in the portal and so we're really creating I think a more seamless less E mail centric.
Speaker Change: We are working with our partners. So we're excited to do more of that and I think down the road Youre right. There are.
Speaker Change: The big seven announced the big six major agencies out there there's lots of smaller agencies that serve the medical space well.
Speaker Change: I don't know exactly how many we will have on our portal partner program in a year, but it will certainly be more than the 10, we have today.
Speaker Change: Excellent thanks, and congrats again.
Speaker Change: Yeah.
Speaker Change: The next question comes from Elizabeth Anderson with Evercore ISI. Your line is open.
Elizabeth Anderson: Hey, guys congrats on the nice quarter and thanks for the question, maybe just a follow up to the last one like how do you kind of see.
Elizabeth Anderson: That sort of agency non agency direct client split evolving over time, I mean honestly, obviously, it's it's still fairly early days, but just sort of any early.
Elizabeth Anderson: Learnings you can help us point to that direction to kind of understand the longer term opportunity there.
Elizabeth Anderson: Yes, thanks, Elizabeth seem to be clear none of these agencies are resellers, we're not letting them do any principal buying or some of the other things you might hear of.
Elizabeth Anderson: With others, we still maintain a direct relationship with.
Elizabeth Anderson: With the end client and again, we have earned the seat at the strategic table as they're thinking about their what they call their HCP their health care professional strategy and message.
Elizabeth Anderson: But I do think there's a lot of data that we can use to help inform again their creative folks who are experts in their clinical areas and again have this the symbiosis ware.
Elizabeth Anderson: I think they look to us to provide them data and insights and we look to them to provide us new intros, maybe to that longer tail of clients.
Elizabeth Anderson: That are frankly hard for us to reach on our own.
Elizabeth Anderson: That's very helpful. Thank you.
Speaker Change: The next question comes from Richard close of Canaccord Genuity.
Speaker Change: It's open.
Speaker Change: Yes, thanks for the questions congratulations on a great great quarter.
Speaker Change: Jeff I was wondering if you could give us any updates obviously, we got to the point of care in the formulary here these new products, but any thoughts on future roadmap of products and then.
Speaker Change: I had a follow up for Ann if you could talk about AI internally, how that's driving margins.
Speaker Change: Sure. Thanks, Richard This is Jeff I'll answer by saying AI as well.
Speaker Change: So we're really proud of that $1 8 million pumps, we did last quarter up 60% quarter on quarter.
Speaker Change: We're about to host our 150 physician medical Advisory Board here in a few weeks and as I look at the docket of.
Speaker Change: The new product ideas, we're going over with their physicians. There is a lot of excitement about what AI can do to help doctors save time provide better care and so we're really leaned in on that and I think that's an area where today we have <unk>.
Speaker Change: Zero monetization.
Speaker Change: And a lot of opportunity.
Speaker Change: Hey, Richard Thanks for the question on AI.
Speaker Change: We do believe AI has helped facilitate margin expansion for us that doximity, we've definitely been leaning into it internally for a year or two now just for some examples are for G&A, we're utilizing AI for sales forecasting and data entry is getting contracts et cetera.
Speaker Change: R&D team uses AI to turbocharge programming for knowledge sharing data.
Speaker Change: And it's all in all we think about AI is very additive to our overall team and we're very fortunate that our team is really embracing that so it definitely has been a factor in the margin expansion, we've seen over the last year to 54%.
Speaker Change: Okay. Thank you.
Speaker Change: The next question comes from Scott Schonhaus with Keybanc. Your line is open.
Speaker Change: Hi, Scott, perhaps your line is on mute.
Speaker Change: Sorry about that.
Speaker Change: Congrats on the momentum and thanks for taking my question on I believe you noted.
Speaker Change: $10 million plus brands to four.
Speaker Change: A million plus brand.
Speaker Change: Yeah.
Speaker Change: Module integrated program side, so how should we think of the revenue opportunities on your platform going forward.
Speaker Change: From these launches, meaning should we see larger budget unlock throughout the year.
Speaker Change: At year end.
Speaker Change: I think revenues versus your past thanks.
Speaker Change: Hi, Scott I apologize you were cutting out a little bit do you mind just quickly repeating the question.
Speaker Change: Sorry, yeah.
Speaker Change: My question basically is you have now all these larger and larger.
Speaker Change: Multi million dollars brands, you just announced another first ever 15 million plus brand how should we think about the revenue opportunities throughout the year in the budget unlocked both on the mid year and at the year end versus years past.
Speaker Change: Sure I'm happy to talk a little bit more about our larger brands just to put this in context two as a reminder, we had our first ever $10 million plus brand only two years ago and so now today, we have $410 million plus brands.
Speaker Change: $750 million plus brand. So we certainly every year continue to reach new milestones with our brand partners and we see no limit to how much our brands are willing to invest the doximity.
Speaker Change: As far as what this means for up sell season, and the rest of the year I think it's just way too soon for us to tell we certainly had a strong upfront and we had strong upfront commitments, especially with regards to our integrated programs.
Speaker Change: Too soon for us to comment further as to what this could mean for the ethanol.
The next question comes from Allen Lutz of Bank of America. Your line is open.
Good afternoon, and thanks for taking the questions one for Jeff or Nate you talked about the $1 8 million AI AI prompts that was up 60% quarter over quarter could you just walk through an example, or two kind of what these AI prompts are doing how doctors are using the tools and then is there any way you can quantify.
Speaker Change: Maybe how much this is adding time to to how how much time doctors are spending on the platform. Thanks.
Speaker Change: Hey, Alan This is Nate yes, we had $1 8 million prompt submitted in the last quarter by doctors, which is the number we're excited about as it continues to grow and we used to become a leader in the applied AI in the clinical setting space and as we continue to invest we're excited about what's possible. So when we.
We've surveyed and interviewed our doctors they told us that they think they can save around 13 hours a week using AI tools and thats, a pretty massive unlock or salvation as their workloads only continue to increase so what exactly are they doing well so far our tools are already assisting.
Speaker Change: With things like answering common questions that patients might have.
Speaker Change: Letters for patients insurance companies has been a big hit I think letters and food processes prior authorization Appeals.
Speaker Change: Colleague Communications.
Speaker Change: Even at certain times of year first drafts of letters of recommendation for trainees and when we ask doctors what they want to prioritize it's no surprise that their top interest around things that have to do with reducing administrative burden.
Speaker Change: There is a lot of time consuming tasks that these doctors have to do.
Today, it's just paperwork and faxing and those are the kinds of things that not only can we help them generate but we can then connect into our existing workflow efficiency tools like vaccine. So that it can evolve to entirely new use cases as I remember sales with us.
Thank you for that and then one for and in the prepared remarks, you talked about the digital market still growing 5% to 7% as we think about the results that you've put out over the past two or three quarters has the end market improved at all or is Doximity just take.
<unk> more share you are really trying to understand if the market EBIT modestly improving and just kind of can you talk about what youre seeing there I kind of the market level.
Speaker Change: Sure. Thanks for the question Alan Yes, as we've looked at market growth over the past few years, we've definitely seen a lot more stability. When we think about that 5% to 7% range that we gave for calendar year 2024, it's likely probably on the higher end of that range. We certainly did see a little bit of marginal.
Speaker Change: Movement, but the majority of our outperformance was due to share gains. So we were able to take quite a bit of share I think there was a little bit of a flight to quality. This year and we were able to really provide our clients with better insights on ROI and audience analysis through our portal and our new products really starting to take off.
Speaker Change: So I would say the majority of our growth. This year was led by share gains in fact.
Speaker Change: Outperformed the market likely by about <unk> <unk> this year, which if you look at historically, where we've seen outperformance, it's typically been closer to <unk> as.
Speaker Change: As we look ahead.
Speaker Change: We saw this past year is not something we necessarily expect to continue a lot of things that really right for us this year, but we think it's a little bit more of an outlier as opposed to the norm. We think it's probably more likely that going forward, we will see something more like our historical norm of two X.
Speaker Change: <unk> growth rate.
Ana: Great. Thanks Ana.
Michael Cherny: The next question comes from Michael Cherny with Leerink Partners. Your line is open.
Michael Cherny: Thank you for taking the question and congrats on a great quarter.
Speaker Change: Maybe if I can build on Alan's question a bit as the forward looking question without actually asking for 26 guidance.
Michael Cherny: When you think about.
Speaker Change: What you saw in 2004.
Speaker Change: The flight to quality dynamic how much of that you think was also macro oriented by the volatility in certain channels changing and as you think about.
Speaker Change: Where we sit right now with the potential for ahead of HHS that is anti DTC advertising some of the other macro elements moving around on you.
Speaker Change: Does that factor into where you see the puts and takes both on market growth and your positioning within the market.
Speaker Change: Hey, this is Nate so what I can say about DTC effects as it's still early.
Speaker Change: Yes.
Speaker Change: A lot of things that have been said, but priorities with a clear path to implementation and.
Speaker Change: Have yet to be set so some of the talk that has bubbled up on DTC or television advertising.
Speaker Change: It could be less likely is in terms of a full band because there'd be a lot of hurdles to overcome a lot of middle ground.
Speaker Change: Regulations, thus far seem like they could be more feasible such as.
Speaker Change: Conversations around pricing disclosures and.
Speaker Change: Transparency around pricing and indeed to see advertisements, but in general I think a lot of it has been discussed will pull well with doctors doctors don't like being on the.
Speaker Change: Receiving end of a lot of requests that have come from commercials that said I think.
Speaker Change: From administration strategies again, it's just too early to make calls and we're not basing our strategies on hopes of administrative change. We're just focused on what we do best to date with our clients.
Speaker Change: Thanks.
Speaker Change: The next question comes from Anne Samuel with Jpmorgan. Your line is open.
Anne Samuel: Hi, Thanks, so much for taking my question and congrats on the outstanding quarter.
Anne Samuel: Just one kind of thinking longer term as you look at the white space for monetization across your platform.
Speaker Change: Are you able to penetrate that with the resources you have today.
Speaker Change: Or will it require any incremental investment just thinking about that the massive incremental margins in the model that you've seen lately.
Jeff Tangy: I think Dan this is Jeff <unk>.
Jeff Tangy: Already said, we're very proud of the opportunity we've opened up with our workflow products and we think that that opportunity is.
Jeff Tangy: As big as our core news feed product so we.
Jeff Tangy: We do think that Thats still a lot of white space as you say for us to go after how can we do it with the team and relationships that we have yes, absolutely I think we work with all the top 20 pharma, we work with all the top 20 hospitals and we continue to show good growth within them I do want to make one clarification.
Jeff Tangy: My comments in the pre record which was.
Jeff Tangy: We said, we had an MLR or net revenue retention rate of 122% with our top 20 clients.
Jeff Tangy: And that is 22% growth over last year and up 122% growth over last year. So I just want to make sure I clarify that I think it's clear from Anna's comments, but I want to make sure we clarify that.
But no I think we are well positioned to be.
Jeff Tangy: The partner of choice for.
Jeff Tangy: Reaching healthcare professionals.
Jeff Tangy: Thats, a very large market that we still think we're in the very early innings of it.
Speaker Change: That's really helpful. Thanks, and if I could just squeak in one more was just hoping you could give us an update on the health of the provider business, how that's trended.
Jeff Tangy: Yeah.
Jeff Tangy: Yeah.
Jeff Tangy: Yes, thanks for the question any so.
Jeff Tangy: We've said before our pharma business does remain our fastest growing business and is responsible for most of the upside that we've seen this year, but.
Jeff Tangy: The business is performing a little bit better than initially expected to start the year. So we do believe we've seen a marginal improvement in that market over the past nine months, we see a little bit of a pickup as well in our new business sales.
Jeff Tangy: That industry is still isn't really out of the macro uncertainty. So we arent expecting a material change in growth from this cohort in the near future. We are still expecting our pharma business to our fastest growing.
Jeff Tangy: Thanks very much.
Jeff Tangy: The next question comes from Craig heading back with Morgan Stanley. Your line is open.
Speaker Change: We have been hearing positive feedback on the video video module front, so Jeff just taking a step back I mean, the product initially got off to a slow start.
Speaker Change: And appears to be accelerating nicely now can you just touch on just things that you've refined and what's resonating that's driving the momentum on the video side.
Speaker Change: Yes, Thanks, Craig.
Speaker Change: A good question too.
Speaker Change: Step back and look at it.
Speaker Change: Within a highly regulated industries like pharmaceuticals, it's not uncommon to see sort of an S shaped adoption curve for new products right, where you have.
Speaker Change: Five trial us who will stick their necks out and go through the legal review would try something out and then everyone else sort of sits on the sidelines and they wait for a year and they wait to see what their ROI looks like and whether or not what they did actually worked and candidly I think thats what happened with our point of care modules and our formulary modules, which are.
Speaker Change: Great products.
Speaker Change: I think really helpful to tell a doctor right as they're waiting for the patient to join a visit whether or not.
Speaker Change: Their formulary, they're basically insurance coverage will cover your client drug right. That's a really actionable moment and again, we've seen really strong rois from the moment and also a strong watch rates there so well it's taken a little while I think for us to get to that second hump in the S curve.
Speaker Change: <unk>, where people are comfortable with it from a legal perspective that vertical video that we launched a couple of years ago. I think is really having its moment and again.
Speaker Change: <unk> said earlier, we think this could be as big when we look at the return on investment for our clients as our core news feed business.
Speaker Change: Helpful color. Thank you.
Speaker Change: The next question comes from David Larsen with <unk>. Your line is open hi.
Speaker Change: Congratulations on the very good quarter, when we looked at like the Cro's like <unk> reported. This morning, they are talking about a 50% year over year increase in cancellations of clinical trials. When you look at someone like the large biopharma companies, they're talking about reducing costs.
Speaker Change: <unk> and different clinical trials that are facing challenges because of the inflation reduction Act and also changes in part D reimbursement, that's putting pressure on them. So it seems like across the CRO space like that sector or parts of it seem to be under a lot of pressure now we look at your results and a fantastic.
Speaker Change: Can you just explain what is going on I mean is it the pressure, they're under that's causing them to invest more in commercial efforts just any thoughts there would be very helpful. Thank you.
Speaker Change: Hi, David This is Nate.
Speaker Change: One thing I'll note is that the I assure you as pharma Etfs, which is sort of a barometer for the U S. Pharma companies is that around 7% year to date so.
Speaker Change: Pretty.
Speaker Change: Some optimism in the market there.
Speaker Change: Typically work with <unk>.
Speaker Change: Brands that are.
Speaker Change: At the launch stage are the early stages post launch maybe you can start a strategic conversation prelaunch, but we're not typically involved.
Speaker Change: In helping these these businesses at their phase one or phase two stages of trials. So businesses that help run trials in the very early stages would be definitely seeing <unk>.
Speaker Change: Types of effects in different macros, then and we would see.
Speaker Change: So with regards to the inflation reduction Act.
Speaker Change: Again, it's still early with regards to the new administration's priorities around it.
Speaker Change: I think.
Speaker Change: Some experts feel that any sort of repeal seems unlikely because it is.
Speaker Change: Our path to free up a few hundred billion, but if you look at the schedule of irate cuts.
Speaker Change: A lot of the drug's affected and this is calendar 2026 mind you are already in a pretty late stage. So when we went and analyze the first 10 drugs announced we found that the affected brands were really just a low single digit percentage of our revenue and because again, we work with the launch and growth drugs.
Speaker Change: More than late stage, and even well pipeline has continued to shift.
Speaker Change: <unk>.
Science and regulatory changes, there's still a lot of exciting medicines in the pipeline that will be a potential launch in growth partners for us.
Speaker Change: Okay, great. Thanks, very much and then without.
Sharing trade secrets or anything like that it seems like your ability to develop new products and modules.
Speaker Change: <unk> to your growth can you size, how much revenue is coming from formulary and point of care.
Speaker Change: And then just any sense for how many sort of new products are in your pipeline like will you introduce maybe one or two per year, just any color or thoughts around that would be helpful. Thank you.
Speaker Change: Yes. This is Jeff I'll answer that yes, we've said that our point of care is 20%. So I think you could saw us against our overall revenue for that.
Speaker Change: And our AI products again, which we have not monetized at all I think are a similar sized opportunity eventually perhaps even bigger down the road.
And we're excited at our medical Advisory Board to get together with a 150 doctors here.
Speaker Change: Work on those more they are trade secrets, we don't like to talk about our new physician products because of course.
Speaker Change: We think we've got some better shots on goal there than others have.
Speaker Change: Got a team that I think has consistently shown that.
Speaker Change: We can innovate in ways. The doctors really appreciate so we hold that close to our best.
Speaker Change: Thanks, very much congrats on a good quarter.
Speaker Change: The next question comes from Vikram Cassava Butler with Baird. Your line is open.
Speaker Change: Okay, Great Hey, Thanks for taking the question I just wanted to follow up on some of the previous questions around the industry trends now that youre through another upfront cycle do you think that 5% to 7% growth rate is the new normal for this industry long term or do you still think that can accelerate at some point and based on the feedback that you're getting from customers.
Speaker Change: What did they need to see in order for that growth rate to move higher over time. Thanks.
Speaker Change: Thanks for the question Vikram and it's something we talk about a ton internally and with our agency and client partners.
Speaker Change: The 5% to 7% we're seeing today I think is a little bit of an effect of the macro circumstances that we're in and the place that pharma is in their shift to digital. So if we're just going to take a massive step back farmers still only spending about 30% to 35% of their budget digitally you compare that to other.
Speaker Change: Industry. Other industries are at 70% plus so pharma is certainly still very under indexed so we could see a world in which that growth rate does increase I think for right now just given the generalised uncertainty, we're not seeing it today, but given how under indexed pharma is on digital I do believe we could see a world where that growth.
Speaker Change: The rate does go up we just don't know when that's going to happen yet.
Okay, great. Thank you.
Speaker Change: The next question comes from Jeff Garrow with Stephens. Your line is open.
Jeff Garrow: Yeah. Good afternoon. Thanks for taking the question, maybe going back to the topic of more launches in January and that kind of a quick turnaround from the upfront selling season does that imply is that medical and legal review is becoming less of a challenge. So I wanted to ask if anything has changed from a compliance perspective or are we just witnessed.
Jeff Garrow: Strong execution and flexible approach of those integrated solutions, serving as a work around to MLR barriers.
Speaker Change: Yeah. Thanks for the question, Jeff and absolutely right. We did see a large increase in January launches compared to prior years, which we're really excited about our goal is always to help our customers get on channel as quickly as possible to maximize their ROI.
And we're really pleased and which are integrated programs are allowing them to do that by starting with whatever module has content preapproved and most of our brands have been working on for a while we'll have at least one module with preapproved content. So that's been really a game changer for us in getting our clients lives faster however, though.
Speaker Change: I do want to make sure to note when we do see changes like this and launch timelines. We also see changes in revenue growth. So this higher percentage of January lunches are contributing to a couple of points of growth upside in fiscal 'twenty 2025 for us, which theoretically could lead to some tougher comps as we move ahead to fiscal 'twenty six.
Speaker Change: The next question comes from Steven Valiquette with Mizuho Securities. Your line is open.
Speaker Change: Steven perhaps your line is on mute.
Speaker Change: Your next question comes from David Roman of Goldman Sachs. Your line is open.
David Roman: Thank you and good evening everybody.
David Roman: Wanted just to come back to the net retention revenue growth, which obviously is continues to track at 20% and it's been at this level for a fairly sustainable period of time, but we're seeing total topline growth out of.
David Roman: A pace that is exceeding that and accelerating so can you maybe help us understand some of the drivers outside of those top customers what is contributing to some of that incremental performance between the <unk> and the largest customers and then the total topline growth and how we should think about sustainability of those drivers on a go forward basis.
David Roman: Thanks for the question, David and yes, we've certainly seen stability and <unk> over the past 12 months and particularly the last two quarters, we did see a slight reacceleration in our overall an R. R.
David Roman: We think is a really good sign that we continue to find additional ways for our existing customers to expand their programs.
David Roman: Such as adding on point of care modules or adding on N piece through our portal and we're really encouraged that we're able to continue to grow within our existing customers now as far as.
David Roman: What Jeff had mentioned earlier, we're also seeing a little bit more growth come from SMB and then we had seen historically and what's great about that as you know are continuing to.
David Roman: Grow at all angles of of the funnel here at the top of the funnel and bond follow us on these customers and I think we'll likely continue to see that over time, especially with our client portal so as far as.
Future of NR just between a couple of moving pieces here with continued growth amongst our top customers. But then also on SMB traction. It's just too soon for us to give a specific number but we don't really expect a material change from kind of what we're seeing here today.
David Roman: That's helpful and maybe just a follow up.
David Roman: Not a question about kind of comps going going forward. This is more true.
Speaker Change: Turning to get at some of the underlying drivers that are supporting the accelerated performance here in this fiscal year, where would you say we are in the lifecycle of some of those drivers I know, Jeff you talked a little about the S curve of some of these things, but maybe you could just go into a little bit more detail on how you think about the improved growth youre seeing this year and as you think about those.
David Roman: Factors, where are we in kind of the evolution of each of those drivers.
Jeff Garrow: Hey, David This is Jeff I'll speak to that yes, where are we.
Jeff Garrow: The short answer is we're doing really well I think this past year, if we really boil it all down we've.
Speaker Change: Demonstrating to our clients that context matters right that being in a clinical context, where doctors are making clinical decisions really does matter.
Speaker Change: And in the ways that you reach them and folks who are finding ways to put ads on video games, and doctors households, or whatever else aren't doing as well aren't having the results. So I think there was a lot of trial its behavior, maybe in the last couple of years around some of those newer technologies, but candidly they don't work right at the end.
Speaker Change: As a day context does matter I think we will continue to deliver a highly credible high integrity clinical context for our physicians.
Speaker Change: Thanks, so much.
Speaker Change: The next question comes from Caroline dressing with Truest Securities. Your line is open.
Caroline Dressing: Thank you and thanks for taking my questions. So just following up on the last.
Caroline Dressing: Fast response, I'm trying to put a final point on your comment earlier on the likely growing at a two times the market growth rate going forward than three times you blow. This fiscal year does that mean that for you to feel comfortable about being back to sustainable high teens, 20% top line growth you need market go through accelerated component.
Or do you think you have enough product in dosing pipeline to keep driving engagement and deepening of pharma partnership, which would get you to that sustainable high teens to 20% growth going forward.
Caroline Dressing: Yeah. Thanks for the question Jill Indra and as I mentioned before if we do look back historically say taking out this year. If we look back over the past four years, we do typically outperformed the market growth rate by somewhere closer to two times and as of right now our best estimate is that the better proxy going forward for.
Caroline Dressing: Our pharma business I think this year, we had an opportunity to accelerate share gains after a softer fiscal 2024, and we're really encouraged that we saw that happen, but going forward. We're just not in a place where we believe we will see more steady consistent share gains as far as if we have the tools in place to continue.
Caroline Dressing: To grow faster than the overall market. We absolutely believe we do I think we still have a ton of opportunity within point of care and within our portal, but we just don't know if we're going to see growth.
Caroline Dressing: <unk> has accelerated as we saw this last year, it's not what we're assuming for next year.
Speaker Change: Okay, and then for my follow up I wanted to go back to the difference between what Youre seeing from your pharma partners, who are on your telephone set of client portal versus not.
Speaker Change: Not on the board of any data or color you can share around engagement Ottawa new product programs are upsets between these two set of pharma clients just trying to understand the incremental opportunity you might be you guys might see updated rollout portal across all your clients and can also like related to that can you confirm if you're a full $10 million plus bonds in 15.
Speaker Change: <unk> done all of those five pharma customers on.
Speaker Change: Sell through the portal.
Speaker Change: I think so Andrew this is Jeff.
Speaker Change: So, yes, I should clarify one thing about the portal people refer to it as self serve the reality is that it's still.
Speaker Change: Our clients are able to self serve and go and see reports and whatnot, but to protect the end user experience.
Speaker Change: Requested and we will hold the law and we will not have new clients, who just show up on our website with a credit card from somewhere we don't know we are still going to vet every.
Speaker Change: The clients and we are still going to review every program that they put out there again to protect the.
Speaker Change: The physician experience, we don't want things that are frankly, not clinical not girish, we are very needed in our approach.
Speaker Change: In terms of talking about clients, who are in the port of level I don't know offhand for those top four I think theyre all on the portal, but I'm not positive.
Speaker Change: I can tell you that.
Speaker Change: So our plan to roll this out to all of our clients is here. It really is a training process and we need to show them.
Speaker Change: It takes time for us to walk them through the different parts of it and make sure. They understand all the data definitions and the <unk> data and there is a little bit of tweaking because the way they defined their <unk> market might be different in every case and so we want to make sure that aligns with their internal definition. So it does take some time for us to get new clients onto the portal, but again.
Speaker Change: It's our goal to get really all of them there this year.
Speaker Change: Thanks, Congrats on a strong cadre.
Speaker Change: The next question comes from Eric Percher with Nephron. Your line is open.
Speaker Change: Thank you.
Speaker Change: Question on visibility into the financial model and I think over the last year you talked about.
Speaker Change: Customer disappear plan around budget flush as a factor and then we thought workflow might drive longer launch multimodal seems to drive improved visibility for next year. So let me ask you.
Speaker Change: Put all of these items together, how do you feel around the visibility you have now looking forward relative to a year ago, and then as we get into a new year is it that you've gained a lot more visibility on the first three quarters, but there may be even more dependence on where you ultimately end up in Q4.
Speaker Change: Yes. Thanks for the question Eric So just as a reminder, when we started last year with our initial guidance, we had over 70% of our subscription based revenue under contract when.
Speaker Change: When we give our guidance in May we don't expect visibility to look materially different than how it looks when we started last year, because theres a bit of a push and pull effect that play with these integrated offerings. So they certainly led to larger deal sizes, which would imply more booked upfront and the stronger visibility into next year, but they also launched in January which led to a <unk>.
Speaker Change: More revenue recognition in the current fiscal year versus the next fiscal year. So because of those two kind of factors that push and pull there.
Speaker Change: As of now we feel visibility is looking pretty similar to last year and just given this past year's performance I think we feel very comfortable with the strength of our visibility into this business.
Speaker Change: I appreciate it.
Speaker Change: The next question comes from Dan Bernstein with Wells Fargo Securities. Your line is open.
Dan Bernstein: Hi, Thanks for squeezing me in here just two quick ones for me.
Speaker Change: First on the $15 million brand.
Speaker Change: What is the anticipated timeframe for the campaign go log on that one and then on the share gains that you called out do you sense of who's on the other side of the share gains that youre experiencing.
Dan Bernstein: Hey, Dan Thanks for the question, so that $15 million plus brand that we mentioned did by one of our integrated packages. So that brand is already live on our channel as far as where we are seeing the share gains.
Dan Bernstein: It's not something that we typically talk too much about when it comes to competitors. I think we are really pleased to have the platform that we have and the interest from our clients and I think our results to show that we are the place that our clients want to spend the incremental dollars.
Dan Bernstein: Great. Thanks, so much.
Jeff Tangy: That is all the time, we have for questions I'll turn the call to CEO, Jeff technique for closing remarks.
Jeff Tangy: Alright, then by thanking the entire docs MB team for working so hard and efficiently to serve more doctors everyday than ever before so thank you and thanks, everyone for joining.
Jeff Tangy: Yes.
Jeff Tangy: This concludes today's conference call. We thank you for joining you may now disconnect.
Jeff Tangy: Okay.
Jeff Tangy: Yeah.
Jeff Tangy: Okay.
Jeff Tangy: Yeah.
Jeff Tangy: Yes.
Jeff Tangy: Okay.
Jeff Tangy: Yeah.
Jeff Tangy: [music].