Doximity, Inc.

Good day and thank you for standing by. Welcome to the Doximity second quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to Perry Gold, Head of Investor Relations. Please go ahead.

Thank you, operator. Hello and welcome to Doximity's fiscal 2022 second quarter earnings call. With me on the call today are Jeff Sangney, co-founder and CEO of Doximity, 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.doximity.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, 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 S-1, our last quarterly report on Form 10-Q, and our other reports and filings with the SEC that may be filed from time to time, including our upcoming firing on Form 10Q. We would like to specifically caution investors that our future performance will be harder to predict for the foreseeable future given the COVID-19 pandemic. Our forward-looking statements are based on assumptions that we believe to be reasonable as of today's date, November 9th, 2021. Of note, it is Doximity's policy to neither reiterate nor adjust the financial guidance provided in today's call unless it is also done through a public disclosure such as a press release or through the filing of a form BK. Today we will discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results. Historical reconciliation to comparable GAAP metrics can be found in today's earnings release. During the call, we may offer other incremental metrics to provide greater insight 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 Dangley.

Thanks, Barry, and thank you, everyone, for joining our second quarter earnings call. We'll begin with a few highlights. First, our top line. I'm pleased to report that we delivered $79.4 million in revenue for the second quarter of our fiscal 2022, an increase of 76% over the same quarter last year and 8% above the midpoint of our guidance. We're also raising our annual guidance by 10% to a midpoint of $327.1 million for fiscal 2022, which translates to 58% growth year on year. Turning to our bottom line, we posted an adjusted EBITDA margin of 41% last quarter, or $32.8 million, which was 22% above the midpoint of our guidance. Our vertical sales model continues to deliver strong incremental margins, allowing us to scale efficiently as the strong ROI we deliver for our clients generates low friction upsells. More on this in a minute. Last but not least, our network continues to grow. As hybrid home office work schedules become the new norm for many doctors, we're proud that our mobile workflow tools have been able to help. Our e-signature and fax product usage continued at our Q1 record highs, and we expanded our paid telehealth platform to an additional 50,000 physicians last quarter. Our active telehealth users reached a record high with over 330,000 unique physicians, NPs, PAs, and medical students completing a telehealth visit with us in the quarter. Okay, those are the highlights. I'd like to take a few minutes now to do a deeper dive on the drivers and sustainability of our top line growth. Then I'll close with a couple partnership spotlights from the quarter. For the past decade, it's been our mission at Doximity to help physicians be more productive, to provide the best care for their patients. Today, over 80% of all U.S. physicians are members of our platform, using it to video call their patients, sign important paperwork remotely, and keep up with medical news. Our interactive platform allows top hospitals and pharmaceutical companies, the best brands in medicine, to connect efficiently with the right physicians about new treatments, clinical trials, and patient referrals. We then measure our clients' return on investment, or ROI, using third-party claims and prescription data. At a high level, there were two primary drivers of our growth this past quarter. The first is ROI-fueled expansion with our existing clients. We completed 23 third-party ROI studies last quarter. Our pharma clients saw a median return of 17 to 1, while hospitals saw a median of 14 to 1. Keck Medicine of the University of Southern California, for example, netted an 18 to 1 ROI from increased new patient referrals, leveraging our peer connection and awareness modules. Of note, this quarter's ROI results were up from our historical median of 10 to 1 for pharma and 13 to 1 for hospitals, as reported in our S-1. Our clients generally target a 2 to 3 times return on their marketing investment, so they're pretty pleased with us at a 14 to 17 times return. These existing clients then reinvest with us by adding new brands, modules, audience, months of coverage, or all of the above. This land and expand upsell motion grew our net revenue retention rate, or NRR, to a record high 173% over the trailing 12 months. That's up from 167% in the prior quarter and 139% in the prior year period. The second key driver of our growth is healthcare's belated but burgeoning shift to digital. As a reminder, U.S. healthcare spent just 28% of its 2020 advertising budgets on digital channels for IDC. That's less than half the 63% share other U.S. industries spent on digital over the same period, pre-marketer. So healthcare digital marketing could double and still be a laggard. But that's changing. For a recent Accenture study, only 10% of U.S. physicians want to return to the pre-pandemic methods of marketing. More and more, they're closing their doors to sales reps, becoming an industry parlance, a no-see doctor. Back in 2008, roughly a quarter or 23% of all U.S. oncologists were no-see. Today, that's grown to 79%, or nearly four out of five oncologists as no-see. It's not just oncologists. Across all U.S. physicians, three out of five are now no-see, per ZS Access Monitor, an industry report. We believe digital will become the primary channel for industry dialogue, but you'd be amazed at how much is still spent on mail and magazines to these doctors today. Finally, since a few of you have asked us about iOS 14, I'd like to clarify that 0% of our revenue is or ever was based on cookie technologies. As a physician's first company, we've always drawn a hard line when it comes to protecting our physicians' privacy. In terms of revenue sustainability, we believe we're in the early endings of a decade-long secular shift to digital. Physicians have fundamentally changed the ways that they interact with industry, and we're leading the way in digitizing these workflows. Okay, I'd like to close now with a couple partner spotlights. First, U.S. News. This quarter, we signed a six-year extension and expansion of our U.S. News partnership. After a statistical review of our coverage, U.S. News decided to end their traditional mail-in voting this year. So Doximity is now the only place where physicians can verify and vote for the U.S. News Best Hospitals rankings. We're proud to help patients and physicians alike make better decisions in seeking care. Second, we're pleased to announce a new partnership with Press Ganey. As many of you know, Press Ganey is the market leader in measuring patient experience, working with over 41,000 healthcare facilities to complete over 26 million patient surveys so far this year. Our collaboration began with us wanting to measure the patient impact of our new telehealth features. For example, we found that when doctors used our professional name badge in their video visits, a bottom of screen overlay which shows the doctor's name, credentials, specialty, and logo, a bit like a TV news anchor, then their patient quality scores went up by, on average, half a star on a five-star scale. patients appreciated seeing the doctor's preferred name and their bona fides. And for doctors and hospitals, a half-star increase is a pretty meaningful result. So hospitals need to conduct a minimum number of patient surveys to maintain their reimbursement levels. So they do lots of expensive phone calls and postal campaigns to get responses. Our real-time surveys not only improve the quality and recency of the patient feedback, but also lowers the cost of collection. As a company, we'll continue to develop partnerships which create win-wins for our physicians and clients. We believe we've become the partner of choice for digital doctoring, and that creates value for both our doctors and partners. Alongside existing partners like UpToDate, Epic, and U.S. News, we're pleased to add Prescady this quarter. Okay, I'd like to end by thanking the entire Doximity team who worked incredibly hard to deliver a spectacular quarter. And with that, I'll hand it over to our CFO, Anna Bryson, to discuss our financials and revise guidance. Anna?